Sharp to raise fresh capital, restructure after FY loss

News Wireless Global 14 MAY 2015
Sharp to raise fresh capital, restructure after FY loss
Sharp announced a new restructuring plan, including fresh capital, cost reductions and new management, aimed at returning the company to profitable growth. The company will sell JPY 200 billion in preferred shares to Mizuho Bank and Bank of Tokyo-Mitsubishi to raise money for reducing debt and another JPY 25 billion in preferred shares to the Japan Industrial Solutions Fund, a state-backed investor, to gain capital for investing in the business strategy. JIS will have two members on Sharp's board. 

To reduce costs, the company will start a voluntary retirement programme for up to 3,500 employees in Japan in the third quarter, as well as downsize its overseas operations and headquarters. The voluntary retirement programme is expected to cost JPY 35 billion. Sharp will reorganise from two business groups and eight units into five product-focused divisions and also implement a new corporate governance system to tighten management control. 

Despite the company's previous recapitalisation and restructuring, it plunged into the red again in the year to March 2015, with a net loss of JPY 222.3 billion. The company said the loss was due to a drop in prices and charge for excess inventories of small and medium-sized LCDs, as well as a charge on supply contracts for solar cells. In total it took JPY 104 billion in impairments and JPY 21 billion in restructuring charges last year. 

It aims to shift the operating result from a loss of JPY 48 billion in the past year to a profit of JPY 80 billion in the year to March 2016, JPY 100 billion in 2017 and JPY 120 billion in 2018. Revenues are expected to grow from JPY 2.786 trillion last year to JPY 3.0 trillion in the year to March 2018. Sharp blamed the poor results on a failure to adapt quickly enough and launch new products, as well as poor management oversight. The company named three new directors to its board, while CTO Shigeaki Mizushima was proposed as the new chairman and Tetsuo Onishi will lead the structural reform at the company. 

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