Sharp, Panasonic post massive losses
TOKYO (AFP) – Panasonic and Sharp racked up more than $11 billion in combined losses over the nine months to December as the embattled Japanese electronics giants warned Friday there was more bleeding to come.
Japan’s battered electronics sector has suffered from myriad problems including a high yen, slowing demand for key export markets, fierce overseas competition and strategic mistakes that left companies’ finances in ruins.
Industry giants Sharp, Panasonic and Sony have been hammered by credit rating downgrades and record losses, while century-old Sharp warned about its own survival last year and put up its Osaka headquarters as collateral for bank loans it needed to stay afloat.
On Friday, the maker of Aquos-brand electronics said its doubled its loss in the nine months to December to $4.6 billion, while Panasonic said it lost about $6.77 billion over the same period, and was on track to lose a whopping $8.3 billion over the fiscal year to March.
But Sharp insisted its massive corporate overhaul, including thousands of jobs cuts, would keep it from going under.
“We believe that these conditions will not cast a material uncertainty about Sharp’s ability to continue as a going concern,” it said in its earnings statement.
The company also offered a glimmer of hope, as it eked out a small 2.6 billion yen operating profit in the third quarter, although it still posted a net loss of 424.35 billion yen over the nine-month period.
It also left unchanged its full-year 450 billion yen net loss forecast.
For its part, Panasonic said it logged a nine-month operating profit of 121.95 billion yen, saying the positive result was due “mainly to fixed cost reductions and streamlining material costs”.
Weak demand for flat-panel televisions, however, helped push total sales down 8.8 per cent to 5.44 trillion yen, it added.
Panasonic, like rivals Sony and Sharp has seen sales slump on the back of the global slowdown while it also took on huge restructuring costs, which contributed heavily to its bleeding bottom line.
In November ratings agency Fitch downgraded Panasonic and Sony to junk status for the first time. Fitch also cut Sharp to junk in November, which followed a similar move by Standard & Poor’s earlier in the year.
Fitch slapped a speculative rating on each firm, pointing to their weak balance sheets and declining position in the global electronics sector. The downgrades mean their debt was no longer considered a safe investment.
Sony, which reports its earnings next week, has said it expects to reverse four years of losses with a small net profit in the year to March.