Sharp Corp. said its energy solutions business will probably return to profit next fiscal year as it shifts to sales of solar panels and batteries to households in Japan.
The maker of smartphone displays, televisions, appliances and solar cells will invest ¥1.4 billion by June to expand solar panel capacity at its Sakai, Osaka, plant by 5 percent to 210 megawatts, Kazushi Mukai, executive director of the business, told reporters in Osaka on Monday.
Sharp is benefiting from Japan's feed-in tariff for alternative energy, while subsidy cuts by European governments caused a ¥5 billion loss for the 2014 business year which ended Tuesday. Solar cells, which accounted for almost a third of operating income last fiscal year, will recover, Mukai forecast.
"We see this business as a potential pillar for Sharp's recovery," Mukai said.
Sharp, projecting its third annual loss in four years, has said it will announce a restructuring plan in May.
The company's shares fell 11 percent this year, compared with a 12 percent gain for the benchmark Nikkei 225 average.
Sharp is focusing its overseas solar strategy on Thailand, with possible expansion to the surrounding countries and later to India, Mukai said.
Under Japan's feed-in tariff, local utilities are required to purchase power produced by solar arrays, or other alternative energy sources, at above-market rates, allowing homes and businesses to generate cash from such projects for as many as 20 years.