Japan’s Sharp in the red, but on profit track

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TOKYO: Sharp said on Friday it lost $17.4 million in the three months to June, but was still on track to book a full-year profit as it tries to move past years of record losses.

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The Osaka-based company’s results came a day after rivals Sony and Panasonic reported profits in the latest quarter.

The trio of firms ushered in huge restructuring plans to climb out of the red after the sector was battered by fierce competition from lower-cost rivals and huge losses in the television business due to a shrinking domestic market.

A sharp drop in the yen since late 2012 has offered a lifeline by inflating the value of profits repatriated from overseas, with the firms launching painful overhauls to slim down their vast operations.

On Friday, Sharp said it lost 1.79 billion yen ($17.4 million) in the quarter through March, well down from a 17.98 billion yen shortfall a year ago, which it said was largely because of one-time factors.

The company—a key Apple supplier that is a leader in screens for smartphones and tablets—was profitable on the operational side and said it was still on track to earn 30 billion yen in the current fiscal year.

Strong sales for some of the vast company’s other consumer products, including washing machines and air purifiers, helped its results.

“Sharp is climbing out of its worst period and its finances are stabilizing,” said
Keita Wakabayashi, analyst with Mito Securities in Tokyo.

“Now that sales volume is recovering, we want to see what kind of profits they’re going to produce.”

Sharp’s quarterly sales came in at 619.7 billion yen, up 1.9 percent on year, as demand for televisions rose, particularly in China. It logged an operating profit of 4.6 billion yen, against 3.01 billion a year earlier.

The company had swung back to profit for the full year to March after two years of huge losses, thanks to stronger sales and cost-cutting.

But analysts have warned that the impact of the weak yen, which boosts exporters’ profitability, is fading, and the industry giants had more work to do on reinventing themselves.

Sony posted a surprise 26.8 billion yen net profit, reversing a year-earlier loss, with sales up about six percent as gamers flocked to the newest installment of its PlayStation games console.

The consumer electronics giant also said box-office hits, including “The Amazing Spider-Man 2,” boosted results at its movie unit, which includes a Hollywood studio.

Sony more than doubled operating profit in its television segment thanks to strong sales of flat-screen TVs in Asia and Europe.

Panasonic, meanwhile, said its net profit for the quarter hit 37.93 billion yen, down from 107.83 billion yen last year when it logged a big one-off gain from a pension scheme change. Sales edged up 1.5 percent.

The firm said it expects to log a 140 billion yen net profit in the current fiscal year.
AFP

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