OSAKA – Sharp Corp. is expected to post a group net loss of about ¥200 billion this fiscal year and is considering additional restructuring, including the closure of four factories in Hiroshima Prefecture, sources close to the matter said Tuesday.
The struggling electronics-maker at the same time aims to strengthen its financial condition by requesting aid from two main creditor banks to increase its capital by around ¥175 billion through measures such as a debt-for-equity swap, the sources said.
The expected loss will be far bigger than the ¥30 billion loss that the company currently expects for the fiscal year ending this month and will represent a plunge from a profit of ¥11.6 billion it posted in the last fiscal year that ended in March 2014.
In a bid to restore its battered operations, Sharp is considering closing its Mihara plant, which mainly produces light-emitting diodes, and its Fukuyama No. 1 to No. 3 plants for sensor-related products such as touch panels, the sources said.
The Osaka-based company also plans to pull out of production and sales of its unprofitable solar panel business, as the yen’s rapid depreciation has driven up the cost of imported components, they said.
Sharp will seek financial support of ¥75 billion each from Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ through a debt-for-equity swap, while it is looking to raise ¥25 billion via a third-party allocation of shares with domestic and overseas companies, the sources said.
The electronics-maker managed to return to profitability for the first time in three years in the last fiscal year, as it shifted its focus to small-to-medium display panels for smartphones and its efforts to revamp its flagging TV and liquid crystal display panel businesses also paid off.
But the company is now facing intensifying competition with Chinese and South Korean rivals that are attracting customers away from it with their lower-cost display panels.
Sharp posted a group net loss of ¥545.3 billion in the fiscal year ended March 2013 that followed a net loss of ¥376.1 billion in the previous year.
The company said later Tuesday in a statement that it is considering a variety of restructuring measures and will outline its new mid-term business plan in May.