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4-Traders Homepage  >  Equities  >  Tokyo  >  Toshiba Corp    6502   JP3592200004

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Japan's struggling TV maker Sharp

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08/26/2012 | 11:43pm CEST

Japan's Sharp Corp (>> Sharp Corporation) is racing to complete an emergency turnaround plan as the loss-making TV manufacturer negotiates a lifeline from its banks and an investment from its Taiwanese partner Hon Hai Precision Industries (>> Hon Hai Precision Industry Co., Ltd.).

Japan's Sharp Corp (>> Sharp Corporation) is racing to complete an emergency turnaround plan as the loss-making TV manufacturer negotiates a lifeline from its banks and an investment from its Taiwanese partner Hon Hai Precision Industries (>> Hon Hai Precision Industry Co., Ltd.).

Following are some key facts about Sharp:

COMPANY OVERVIEW

Sharp Corp (>> Sharp Corporation) operates 21 factories in 13 countries. Among them are four overseas TV assembly plants in Poland, Malaysia, China and Mexico, each employing around 1,500 people.

Its two most advanced plants are the Sakai and Kameyama liquid crystal display factories in western Japan. Sakai, which builds TV panels, is 46 percent owned by Taiwanese partner Hon Hai. Kameyama is the hub of Sharp's small LCD business, supplying panels to customers including Apple Inc (>> Apple Inc.) for its iPad and iPhone.

Consumer electronics accounts for almost two-fifths of revenue at Sharp. It also operates a home appliance business and a unit making printers and cash registers, both of which make up a tenth of sales.

Its solar panel division makes up 8 percent with the remainder of income generated from LCD panels and other components.

Sharp also has eight research and development centres, and 30 sales subsidiaries worldwide.

The company, which this year is celebrating its centenary, expects an operating loss of 100 billion yen ($1.3 billion) for the year to March 31.

That August 2 forecast prompted ratings agencies Moody's and Standard & Poor's to cut their credit ratings, while rival Fitch warned Sharp could lose investment-grade status.

The company, based in Osaka, western Japan, employs 57,000 people worldwide. It's latest restructuring plan calls for a reduction in staffing levels by 5,000 people, mostly in Japan. Sharp says it will seek voluntary redundancies by the end of the year.

Local media have reported that planned job cuts will double to 10,000.

FINANCING

Sharp has to refinance 360 billion yen ($4.58 billion) in short term commercial paper loans and has a 200 billion yen convertible bond due in Sept 2013. Total debt at the company is 1.25 trillion yen.

Sharp is seeking financial help from its two main banks, Mizuho Financial Group (>> Mizuho Financial Gr.) and Mitsubishi UFJ Financial Group. (>> Mitsubishi UFJ Fin.)

Sharp has hired two consulting firms, including PricewaterhouseCoopers <PWC.UL> to compile an asset report for its banks, according to sources that spoke to Reuters.

Japanese media reported that the banks are considering 230 billion yen in loans to the company, 130 billion of which will be paid in August with the remainder in September.

In a bid to raise cash, Sharp is mulling the sale of its Polish and Chinese TV plants to Hon Hai, sources familiar with the plan earlier told Reuters.

Hon Hai owns a 46.5 percent stake in Sharp's Sakai plant. Utilization at the facility fell to 30 percent in the quarter ending June 30. That has since jumped to 80 percent of capacity, helped by orders from Samsung Electronics (>> Samsung Electronics Co., Ltd.), Sony Corp (>> Sony Corporation) and others.

Local media reports have also said Sharp will sell its solar panel business, part of its Kameyama plant, as well as its copier and printer business. Sharp has denied the reports.

Sharp also owns an empty office building in Tokyo that could be worth around $500 million, according to analysts estimate.

The company is also considering the sale of receivables and marketable securities.

SHARP'S STOCK HOLDINGS

Sharp's stock holdings are worth around 40 billion yen.

PIONEER (>> Pioneer Corp.) 30 million shares

SEKISUI HOUSE (>> Sekisui House Ltd.) 4.5 million shares

T&D HOLDINGS (>> T & D Holdings) 2.7 million shares

TOSHIBA (>> Toshiba Corporation) 6.8 million shares

DAIWA HOUSE (>> Daiwa House Ind.) 2.2 million shares

MITSUBISHI UFJ (>> Mitsubishi UFJ Fin.) 5.6 million shares

SEKISUI CHEMICAL (>> Sekisui Chemical) 3.2 million shares

MIZUHO FINANCIAL (>> Mizuho Financial Gr.) 15.5 million shares

OLYMPUS (>> Olympus Corp) 1.5 million shares

TOPPAN PRINTING (>> Toppan Printing) 3.3 million shares

108 OTHER COMPANIES 106 million shares

COMPANY HISTORY

Founded in 1912, Sharp's first hit product was a mechanical ever-sharp pencil, from which it derived its name.

Sharp in 1953 became the first Japanese company to mass manufacture televisions with a model that cost 175,000 yen, equivalent then to three years starting salary of a university graduate.

A pioneer of liquid crystal displays, Sharp launched its first LCD TV, a three-inch model, in 1987.

Sharp is also credited as the inventor of the electronic calculator.

($1 = 78.6500 Japanese yen)

(Reporting by Tim Kelly; Editing by Alex Richardson)

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Financials ( JPY)
Sales 2017 5 285 030 M
EBIT 2017 -
Net income 2017 136 195 M
Debt 2017 581 612 M
Yield 2017 0,12%
P/E ratio 2017 10,25
P/E ratio 2018 14,38
EV / Sales 2017 0,37x
EV / Sales 2018 0,37x
Capitalization 1 393 324 M
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Mean consensus HOLD
Number of Analysts 13
Average target price 291  JPY
Spread / Average Target -11%
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NameTitle
Satoshi Tsunakawa President, Chief Executive Officer & Director
Shigenori Shiga Chairman
Masayoshi Hirata Chief Financial Officer & Director
Shiro Saito Senior Manager-Research & Development
Yasuo Naruke Director, SVP & Representative Executive Officer
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