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Sharp Q2 profit falls 24%, cuts outlook

Sharp Q2 profit falls 24%, cuts outlook
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First Published: Thu, Oct 28 2010. 01 54 PM IST
Updated: Thu, Oct 28 2010. 01 54 PM IST
Tokyo: Japanese electronics maker Sharp Corp lowered its full-year forecast closer to market expectations after reporting on Thursday that its quarterly profit fell 24%, hurt by sluggish demand for liquid crystal display panels and a stronger yen.
Sharp relies on foreign markets for about 50% of its sales and like other Japanese exporters has seen the yen’s strength erode the value of its overseas earnings. The yen is hovering near a 15-year high against the dollar.
“The negative impact of the strong yen is big for Sharp just as for other manufacturers,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
For the second half of the business year the LCD panel maker said it expects an average exchange rate of ¥82 to the dollar for the October-March second half, compared with an earlier estimate of ¥88.
Investors may be less concerned about any further rapid advance in the value of the yen, however, and more worried about the performance of Sharp’s TV business, Akino added.
“Its overseas sales haven’t been strong, and a lot will depend on its sales at home, though the prospect isn’t really bright there either,” he said.
Sharp, which competes with Samsung Electronics and LG Display in LCD panels, had to cut production rates at a state-of-the-art panel plant earlier this year, hurting profits.
The maker of Aquos LCD TVs posted an operating profit of ¥20.9 billion ($256 million) for July-September quarter, versus a ¥27.6 billion profit a year earlier and roughly in line with market expectations.
For the full year to March, Sharp cut its operating profit outlook to ¥90 billion from ¥120 billion, lower than the consensus for an annual profit of ¥94.7 billion, according to a survey of 24 analysts by Thomson Reuters I/B/E/S.
Sharp is also the world’s third-largest producer of solar cells by shipments, after First Solar and Suntech Power.
Shares of Sharp have fallen about 28% in the year to date, underperforming a 5.9% fall in the broader electrical machinery index. Its stock closed 0.24% higher at ¥844 in Tokyo on Thursday.
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First Published: Thu, Oct 28 2010. 01 54 PM IST