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Sharp to report net loss of ¥200 billion for fiscal 2015: sources

Kyodo

Sharp Corp. is expected to report a net loss of around ¥200 billion for the fiscal year ending Thursday amid a slump in its mainstay liquid crystal display business, sources close to the matter said Tuesday.

The envisioned loss for the second consecutive year for the struggling Japanese electronics maker could expand as Taiwan’s Hon Hai Precision Industry Co., which is in the final stages of takeover talks with Sharp, requested an evaluation of its inventory-related losses, the sources said.

Sharp did not reveal an estimated net profit or loss in its latest earnings forecast released last month.

The company is also likely to incur an operating loss of some ¥90 billion for the same period, compared with an estimated profit of ¥10 billion, they said.

In the fiscal year ending March 2015, Sharp lodged a group net loss of ¥222.35 billion and an operating loss of ¥48.07 billion.

The Osaka-based company said it is “currently considering a downward revision in our consolidated financial results” in a statement released Tuesday.

Sharp’s earnings took a hit from sluggish demand for small- and medium-sized LCD panels used for smartphones due in part to a slowdown in the Chinese economy.

The takeover negotiations between the two companies have been prolonged as Hon Hai, also known as Foxconn Technology Group, expressed concerns over future financial risks facing Sharp including contingent liabilities.

They will likely hold their respective board meetings Wednesday, seeking to sign a deal that will enable Hon Hai to take the lead in restructuring Sharp.

The expected annual loss was initially reported earlier in the day by the Nikkei business daily.

“The report of annual losses is having some impact, but there is also the issue of dilution on which there is very little clarity,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, referring to the amount of shares that Sharp may issue as part of the Foxconn deal.

It will take some time after completion of the deal before Sharp earnings show actual improvement, he said. “It’s probably short-term individual investors that are moving the shares now,” he said.

Sharp is projected to post an operating loss of ¥24 billion and net loss of ¥114 billion, according to the average of analysts’ estimates compiled by Bloomberg.

Hon Hai said Sunday it will hold a board meeting on Wednesday as scheduled, where it may discuss the Sharp deal depending on the stage of negotiations, according to a statement to the Taiwan stock exchange.

Sharp said Monday it aims to reach an agreement as soon as possible.

Sharp’s banks are ready to push back the deadline for most of the company’s ¥510 billion in loans and credit lines beyond March 31, people with knowledge of the matter said earlier.