Tokyo: Sharp Corp beat market expectations with a forecast for annual operating profit to more than double to its highest in three years, after it swung to a quarterly profit on strong sales of display and solar panels.
The Japanese maker of Aquos LCD TVs trails Samsung Electronics, Sony Corp and LG Electronics in LCD TVs. But it is benefitting from cost competitive display panels made at its cutting-edge Japanese LCD plant that came onstream in October.
Sharp’s forecast partly reflects the company’s plan to begin selling 3D-capable LCD TVs this year, joining the market for what is expected to be the industry’s next hot product.
Strong Chinese demand for flat-screen TVs is brightening up the outlook for the global LCD sector, while increasing spending from businesses and consumers on computers, flat-screen TVs and new gadgets is also supporting the industry.
Sharp expects operating profit to total ¥120 billion ($1.3 billion) for the year to March 2011, above the consensus of a ¥112.9 billion profit in a poll of 22 analysts by Thomson Reuters I/B/E/S.
“It is notable that sales of highly-profitable items such as large-sized TVs, LCD panel supplies and solar cells are growing,” said Seiichiro Iwamoto, a senior fund manager at Mizuho Asset Management.
“But the market has already factored the earnings recovery into the stock.”
Solar cell sales to rise
To help drive its display and solar panel operations further, Sharp started output at a new solar cell factory last month, and plans to double output capacity at its flagship LCD plant in July, three months ahead of its original schedule.
Sharp aims to sell 15 million LCD TVs this financial year, up 47% from a year earlier. It is targeting a 16% rise in LCD panel sales to ¥1.03 trillion.
Sharp is also the world’s third-largest solar cell maker behind First Solar and Suntech Power Holdings Co and is seeing brisk demand in Japan thanks to government subsidies for residential solar panel installation.
It is aiming for solar cell sales of ¥250 billion in the year to March, up from ¥208.7 billion a year earlier.
Sharp reported operating profit of ¥29.3 billion in January-March, the final quarter of the previous financial year, a reversal from a loss of ¥90.4 billion a year earlier.
Before the results, Sharp shares closed up 2%, outperforming a 1.6% rise in the Tokyo stock market’s electrical machinery index. The stock has gained 5.4% so far this year through Monday versus a 15.5% rise in the sector index.