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Sharp Reports Higher Sales, Improved Profits

4/29/2011 11:39:46 AM Eastern
Osaka, Japan - Sharp Electronics posted higher net sales and increases in operating income and net income for the fiscal year ended March 31.

Net sales for fiscal 2010 were 3,021.9 billion yen, up 9.7 percent compared to the previous year.

Operating income was 78.8 billion yen, up 52.0 percent while net income was 19.4 billion yen, 4.4 times that of the previous year, Sharp reported,

The severe business environment continued during fiscal 2010, including a trend in exchange rates resulting in the appreciation of the yen, and a drop in market prices due to fierce competition. Nevertheless, the effect of government stimulus packages such as the Eco-Point Program and the launch of uniquely-featured products enabled Sharp to significantly increase its sales and profit compared to the previous year, the company said.

However, sales suffered a steep decline in the wake of the Great East Japan Earthquake on March 11 and this has led actual results to fall short of the forecast announced on Oct. 28, 2010.

In Consumer/Information Products segment sales of A/V and communication equipment in fiscal 2010 were 1,426.7 billion yen, up 7.1 percent, and operating income was 40.7 billion yen, 2.6 times that of the previous year. In Japan, sales of LCD TVs increased, reflecting the effects of the Eco-Point Program. Sales of Blu-ray Disc recorders also expanded, Sharp said.

For fiscal 2010, sales of LCD TVs were 803.5 billion yen, up 20.5 percent over the previous year. Sales on a unit basis fell slightly short of initial projections of 15 million units because of the sharp sales drop in Japan in the last half of March 2011, which were severely affected by the earthquake disaster.

Nevertheless, Sharp was able to achieve a significant increase in unit sales compared to last year's results, reaching sales of 14.82 million sets, up 45.5 percent.

In fiscal 2011, Sharp will strengthen its medium-size LCD TV lineup in countries with emerging economies, and in North America and China, will introduce large-size LCD TVs such as 60-inch models, therefore creating new markets, Sharp reported.

Sales of LCDs for fiscal 2010 were 1,026.9 billion yen, up 17.0 percent over the previous year.

Since early April, Sharp has stopped the input of glass substrates at its large-size LCD plants. However, it aims to restart operations in early May by stabilizing the procurement of parts and materials and normalizing inventory levels.

From the second quarter, Sharp expects to be able to maintain high utilization rates at its large-size LCD plants, with the conversion of a portion of the production line at the Kameyama No. 2 Plant to produce small- and medium-size LCDs, and with the increased production ratio of large-size LCD panels for TVs such as 60-inch models. In addition, the G6 plant in China (Nanjing CEC-PANDA LCD Technology Co., Ltd) will start full-fledged operations and contribute to the performance of its LCD business starting from the middle of fiscal 2011.

Sharp said the move will allow it to procure panels that take advantage of cost competitiveness in China and the appreciation of the yen.

For small- and medium-size LCDs, extremely adverse market conditions continued until the first quarter of fiscal 2010. However, beginning in the second quarter, market conditions showed signs of a turnaround centered mainly on in-vehicle applications, smartphones, and tablet terminals.

Sharp said in the areas of high-definition LCDs and 3D LCDs where it's "strengths can be utilized to the fullest, the number of manufacturers capable of producing these devices is limited." In this environment, the supply/demand balance has tightened and Sharp's plants are operating at full capacity.

None of Sharp's production facilities suffered extensive damage as a result of the Japanese earthquake, the company reported. However, for the industry as a whole, the supply chain, which spans a wide range of areas including the semiconductors, materials, gases and chemicals necessary for various production activities, and the energy infrastructure such as electric power, were severely affected.

Sharp expects business to remain unpredictable, as a steep decline in consumption is anticipated. It expects "a rough financial performance for the first quarter in fiscal 2011, as reflected by the suspension of glass input at the large-size LCD plants."
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