Sharp has reported an extraordinary loss of 117.1 billion yen ($1.4 billion) for the financial year ending March 2012. The company has cited restructuring costs and inventory losses as the causes for the write-down, but also projected that its TV business would lose a further 18.7 percent of its projected sales in the current year. The company has decided to convert some of its big-screen LCD production lines into mobile LCDs as it tries to reassert its dwindling display business. It's yet more bad news after the company sold part of its LCD manufacturing business to Hon Hai, Sony withdrew from a joint venture and refused to deal with Sharp in the future, plus an 86 percent collapse in profits.
Notice of Recording of Restructuring Charges (Extraordinary Item in Other Expenses)
Sharp Corporation ("the Company") announces that it recorded restructuring charges as an extraordinary item in other expenses in consolidated financial results for the year ended March 31, 2012.
1. Reason for recording of restructuring charges
The Company is working to increase its profitability through LCD business restructuring, to deal with changing environment in the LCD market.
In order to reinforce mobile LCD business toward an optimal LCD production framework, the Company is converting its production lines to produce mobile LCDs at the Kameyama No.2 Plant, where it used to focus on production of large-size LCDs for TVs. The plant started a mass production of high-performance LCD panels incorporating oxide semiconductor, InGaZnO (IGZO) for the first time in the world.
In large-size LCD business, the Company is aiming to improve the profitability by raising the utilization rate and reinforcing its cost competitiveness with a new strategic vertical integration framework, which is being promoted by the recently announced business alliance with Hon Hai Group and a business integration of LCD color filters at the Sakai Plant.
The above business restructuring required 117,110 million yen and the details of restructuring charges are as follows.
Maintenance cost of inactive noncurrent assets incurred in establishing framework for the conversion of production to LCD panels using IGZO 37,717
Costs incurred to reinforce business foundations (inventory write-down, etc.) in preparation of promoting establishment of strategic vertical integration of large-size LCD business 68,125
Restructuring charges related to overseas subsidiaries, etc. 11,268
2. Impact on financial performance
Consolidated financial results for the year ended March 31, 2012, announced today, have reflected the impact on financial performance relating to the above.