AFP, Tokyo :
Struggling Japanese electronics maker Sharp said Tuesday it expects to post its first operating profit in three years and narrow its net loss on the back of reforms and its buyout by Taiwan’s Hon Hai.
The Japanese industrial mainstay, pummelled by huge losses and mounting debts, was formally taken over in August by Hon Hai, better known as Foxconn, which took a 66 percent stake for $3.7 billion.
It was the first foreign acquisition of a major Japanese electronics firm and marked a watershed for Japan’s once-mighty home electronics sector, which nurtured global brands including Sony and Panasonic but has struggled in the face of foreign competition.
Sharp said it expects to report a 25.7 billion yen ($245 million) annual operating profit in the business year ending in March, citing “structural reforms and synergy effects with the Hon Hai Group”.
Sharp saw a 161.9 billion yen annual operating loss in the past fiscal year.
Its net loss is expected to shrink to 41.8 billion yen from 255.9 billion yen, but sales are seen falling to 2.0 trillion yen from 2.5 trillion yen.
For the April-September period, Sharp said it posted a 45.4 billion yen net loss, about half the 83.6 billion yen booked in the same period the previous year.
Operating profit was 79 million yen, up from a 25.1 billion yen operating loss.
Despite the improvements, analyst Hideki Yasuda at Ace Research Institute was cautious.
“We can’t say Sharp achieved full recovery only by seeing quarterly figures,” he said.
“The prospect for the company is still uncertain. It’s too early to gauge the impact of Hon Hai on Sharp’s earnings.
“It is still unknown if Sharp managers and employees can keep up with Hon Hai’s expected fast-moving reform.”
Over the past decade Sharp bet almost everything on liquid crystal displays (LCDs), boasting the most advanced technology in the world.
But that turned into a weakness when the market became more competitive after the 2008 global financial crisis and lower-cost rivals dug into its profits.
While the firm still produces cutting-edge LCD screens, it has lacked the huge research and development funds necessary to keep ahead of the competition.
