--Sharp, Panasonic earnings recover somewhat in October-December
from massive losses in previous quarter
--The two companies maintain earnings outlooks for full fiscal
year
--Sharp says planned measures should eliminate doubts about
ability to continue as going concern
TOKYO--Japanese electronics manufacturers Sharp Corp. (6753.TO)
and Panasonic Corp. (6752.TO) on Friday offered signs of a modest
earnings recovery, improving their performance from massive losses
in the previous quarter, but warning they still face a difficult
situation.
The last time Panasonic and Sharp announced quarterly results,
in October and November respectively, the two companies slashed
full-year earnings outlooks to forecast record annual losses,
sparking concern about the financial strength of the two iconic
companies.
This time, in announcing results for the three months to
December, Sharp and Panasonic said they were able to stop the
decline and maintained their earnings outlooks for the full year to
March.
"This third quarter was able to proceed smoothly and according
to plan. We are still in a tough condition financially and
operationally, so we're not going to ease up," said Tetsuo Onishi,
Sharp's chief administration officer, at a news conference.
Sharp reported a net loss of 36.7 billion yen ($398 million), in
the three months ended Dec. 31 compared with a loss of Y173.6
billion in the same period a year earlier. On an operating basis,
the company bounced back into the black with a profit of Y2.6
billion, surpassing expectations for a loss of Y2.92 billion from
analysts polled by Thomson Reuters. Revenue rose 15% to Y678.2
billion.
Sharp said it was helped by a reduction in fixed costs and
assets from its restructuring program, which included a cut of
about 10% of its workforce.
The improving results didn't prevent Sharp from reiterating a
statement that while those losses may raise uncertainty about its
future as a going concern, planned countermeasures should eliminate
such doubts.
Sharp's balance sheet was badly hurt through the first half of
the fiscal year as it burned through cash as its core electronics
business continued to lose money. Its credit rating has been
lowered to "junk" status--below investment grade. And it is selling
off assets, which may include TV-related factories, to raise
capital. The company also reached an agreement to accept a capital
injection of up to Y9.9 billion from Qualcomm Inc. (QCOM)
For the full-year to March, Sharp said it is maintaining its
forecasts for a net loss of Y450 billion, an operating loss of Y155
billion and revenue of Y2.46 trillion.
Helped by a weaker yen and aggressive cost cutting, Panasonic
said it returned to profit after incurring a hefty restructuring
loss in the year-ago period.
Panasonic posted a net profit of Y61.4 billion yen in the
October-December quarter versus a Y197.6 billion loss in the
year-ago period. The result comes three months after Panasonic
reported a near Y700 billion loss, one of the biggest-ever
quarterly losses by a Japanese manufacturer. Sales fell 8% to
Y1.801 trillion in the three months to December.
Under President Kazuhisa Tsuga, Panasonic is undergoing a
radical shift in strategy, turning away from its once mainstay
consumer electronics business to focus on more industrial products
that offer better profit margins. Panasonic plans to streamline its
operations, focusing on fewer businesses and employing less staff.
In October, it announced an additional Y400 billion in
restructuring charges for the streamlining.
"We're continuing to reduce our fixed costs," said Panasonic
Chief Financial Officer Hideaki Kawai. "The reason why we've been
able to secure this level of profit is because our management
structure is improving."
Instead of clawing for razor-thin margins against South Korea's
Samsung Electronics Co. (005930.SE) and LG Electronics Inc.
(066570.SE) in the competitive television industry, Panasonic sees
more opportunity in constructing environmentally friendly buildings
equipped with its energy-saving appliances and its renewable energy
products, such as solar panels.
For the full year to March, Panasonic said it plans to maintain
its forecast for a loss of Y765 billion, an operating profit of
Y140 billion, and sales of Y7.3 trillion.
The yen's slide since mid-November offers Panasonic some relief.
A lower yen increases earnings made abroad when repatriated back
into yen and eases price competition with overseas rivals.
Write to Daisuke Wakabayashi at daisuke.wakabayashi@wsj.com
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