Sharp Corp., the Japanese TV maker firing 5,000 workers after forecasting a second straight loss, said it plans to post a profit next fiscal year with the help of job cuts and cost reductions.
“We will achieve structural reforms without fail,” President Takashi Okuda told employees today, according to an e-mailed statement from Sharp, which didn’t provide a specific forecast. The net-income forecast for next year contrasts with the 9.6 billion-yen ($124 million) average loss forecast of nine analyst estimates compiled by Bloomberg.
Japan’s biggest maker of liquid-crystal panels is cutting jobs and negotiating with a labor union to reduce wages, managers’ salaries and bonuses to trim 14 billion yen in costs, the company said earlier this week. That would be in addition to a 100 billion-yen reduction in fixed costs that Sharp announced last month.
The maker of Aquos TVs reiterated its target to post an operating profit in the second half of the year ending in March, the statement cited Okuda as telling employees on the occasion of the company’s 100th anniversary tomorrow. Sharp last month forecast a 250 billion-yen net loss for this year, eight times greater than originally predicted, because of its unprofitable TV and display units.
The company posted a record 376 billion-yen net loss in the year ended in March.
Sharp was unchanged at 208 yen at the close of trading in Tokyo today. The shares have declined 69 percent in Tokyo trading this year, making them the biggest percentage loser among more than 1,600 companies in the MSCI World Index.
The 100-year-old inventor of mechanical pencils is seeking to raise cash and cut costs as it faces a total of 706 billion yen in bonds, commercial paper and borrowings maturing within one year. The company is cutting 5,000 jobs, its first workforce reduction since 1950, as part of plans to reduce fixed costs by 100 billion yen.
Sharp is working on a contingency plan to present to banks as the company seeks help to refinance debt, Tetsuo Onishi, the senior executive managing officer in charge of accounting, said earlier this month. The company has submitted a plan for returning to an operating profit in the second half and hired a specialist to evaluate assets and business plans, Onishi said.
Sales of display panels for tablet computers are less than the company expected, a senior executive at the Japanese company said earlier today. Finding customers for the IGZO panels is the biggest focus of Sharp, which is trying to negotiate a tie-up with Taiwan’s Foxconn Technology Group.
“We need to get enough orders to keep the factory running,” the executive said in a briefing given on condition that the speaker not be identified. “That is our biggest mission.”
Sharp, a supplier to Apple Inc., has invested at least 350 billion yen in the factory, which was converted from making TV panels and started producing IGZO panels in March. The company hopes an alliance with Taiwan’s Foxconn may help it find customers for the displays, the executive said.
“If demand for this technology is lower than expected, it will be difficult for the company to achieve its operating profit target,” said Yuji Fujimori, a Tokyo-based analyst at Barclays Plc. “The company may be forced to lower its earnings estimates when it submits revival plans to banks this month.”