Japans Sharp Corp. warned on Tuesday it would report another annual loss as smartphone display sales suffer from increased competition and limited Chinese reach.
Smartphone makers across the world have suffered from lower sales as customers prefer low-cost Asian handset makers, including Xiaomi and Coolpad.
Display maker Sharp is headed for a third annual loss in four years as hopes of benefiting from the growth of Chinese smartphone companies are fading.
Chief Executive Kozo Takahashi said Sharp managed to strike deals to supply its displays to 15 Chinese companies. However, lower-than-projected demand for smartphones in China has hurt the division and left Sharp with mounting inventories.
“We feel a very strong sense of crisis that our financial situation continues to be very severe,” Mr. Takahashi said, cited by the Financial Times.
Sharp said it expects to report a net loss of ¥30 billion for the financial year ending March 31, significantly worse compared to its previous guidance of Y30 billion in profit. In comparison analysts polled by Thomson Reuters had projected a net profit of ¥22.4 billion.
Last year Sharp managed to report a positive full-year result, following two years of losses with a combined value of more than $8 billion. However, the company is on its way for another annual loss after it warned in January that performance would most likely not meet expectations.
As a counter measure for Sharps troubles Mr. Takahashi said that directors would get reduced monthly payments of up to 55% from this month onward. The move follows the removal of Sharps bonus system.
The companys display business is also under pressure from rivals, including Samsung and Chinas Huawei, who offer their product at a better price for smartphone makers.
Sharp reported a net loss of ¥11.9 billion during the third quarter ended December 31. The figure compares with a profit of ¥22 billion in the same period of 2013. Revenue for the three months fell 6.4% to ¥762.7 billion.
The company booked a ¥1.6 billion loss from its energy business compared to a profit of ¥5.9 billion it reported a year ago. Revenue in the division fell 50.6% to ¥53.6 billion.
Following the weak results from its solar unit, Sharp announced it will sell its US-based Recurrent Energy unit to Canadas Solar. The move also comes after Sharp stopped production of solar panels at its plants located in the US and UK earlier last year.
Sharp gained 5.60% on Tuesday and closed at ¥245.00 in Tokyo, marking a one-year decrease of 29.19%. The company is valued at ¥394.68 billion.
According to the Financial Times, the 13 analysts offering 12-month price targets for Sharp have a median target of ¥240.00, with a high estimate of ¥500.00 and a low estimate of ¥170.00. The median estimate represents a 2.04% decrease from the last close price.
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