Sales and Operating Income by Product Group
Sales by product group include internal sales between segments (Consumer/Information Products and Electronic Components).
Both sales and operating income suffered a significant decline in the two product groups of Audio-Visual and Communication Equipment, and LCDs. The deterioration in sales and operating income for the company as a whole can be attributed almost entirely to these two groups.
(1) Audio-Visual and Communication Equipment
Sales of Audio-Visual and Communication Equipment in the first quarter of fiscal 2012 were 134.1 billion yen, down 54.9%, and operating loss was 20.2 billion yen, compared to the same period last year.
Taking into account the current situation as well as sales prospects for the future, the forecast for fiscal 2012 as a whole has been revised to sales of 690.0 billion yen, down 35.0% compared to last year, and operating loss of 17.0 billion yen.
LCD TVs
Although LCD TVs enjoyed brisk sales in emerging market economies such as the ASEAN countries, sales in China were sluggish, and the Japanese domestic market was hit by a steep drop in demand. As a result, sales of LCD TVs in the first quarter of fiscal 2012 were 77.7 billion yen, down 49.6%, while on a unit basis, sales were 1.66 million sets, down 49.4%, both compared to the same period last year.
We anticipate the harsh market environment to continue. However, Sharp will work to achieve a turnaround from the performance in the first half and enter into a recovery phase, by expanding business in emerging markets where the significant growth is expected. In addition, the demand in Japan is projected to bottom out in the second half of fiscal 2012. We expect such factor will also help Sharp to improve the business.
For fiscal 2012 as a whole, the forecast for sales on a monetary basis has been revised to 350.0 billion yen, down 39.8%, and on a unit basis, to 8.00 million sets, down 34.9% compared to last year.
Mobile Phones
Sales of mobile phones were 29.2 billion yen, down 68.4%, and unit sales were 0.77 million units, down 63.1%, both compared to the same period in the previous year, due mainly to intensifying competition from overseas mobile phone manufacturers in Japan and the fact that supply shortages for key components caused bottlenecks.
Sharp will work to revitalize sales by introducing handsets with unique features such as models equipped with an easy user interface and with IGZO LCDs.
For fiscal 2012 as a whole, the forecast for sales on a monetary basis has been revised to 240.0 billion yen, down 21.5%, and on a unit basis, to 6.30 million units, down 18.2% compared to last year.
(2) Health and Environmental Equipment
Sales of Health and Environmental Equipment were 78.2 billion yen, up 5.3%, and operating income was 8.2 billion yen, up 22.7% over the same period last year, due to strong sales of products such as air conditioners and refrigerators in overseas markets. The forecast for fiscal 2012 as a whole remains in line with original projections.
(3) Information Equipment
Sales of Information Equipment were 64.7 billion yen, down 2.1%, compared to the same period last year due mainly to the effects of corporations holding back on investment because of uncertainty in the economic outlook. Operating income was 2.3 billion yen, down 60.0%, due mainly to a deterioration in profits by selling of products manufactured in the previous fiscal year.
Sharp will be aiming to expand business by working to strengthen its sales system of interactive whiteboards and multi-screen display systems.
The forecast for fiscal 2012 as a whole has been revised to sales of 290.0 billion yen, up 4.5%, compared to the previous year, and to operating income of 22.0 billion yen, down 20.7%.
(4) LCDs
Sales of LCDs were 145.9 billion yen, down 22.4% compared to the same period last year. Operating loss was 63.4 billion yen, due mainly to a deterioration in profits for small- and medium-size LCDs. In the first quarter of fiscal 2012, delays in orders from major users for small- and medium-size LCDs led to reduced production levels at plants. Also, in large-size LCDs, operations at the Sakai Plant were reduced to about 30% since achieving optimal inventory levels has been made a top priority. As a result, sales fell drastically below the same period last year and the losses expanded.
<Small- and medium-size LCDs>
In the midst of growing demand for high-resolution panels for use in smartphones and tablet terminals, Sharp’s small- and medium-size LCDs have received high praise from users.
Sharp will seek to expand orders for LCDs for which the launch of Windows® 8 is expected to drive demand growth in the future. In addition, we will also be working to increase business and improve profitability by enhancing its customer support system to strengthen efforts aimed at new users to promote design-in of our LCDs.
<Large-size LCDs>
Sharp will aim to improve profitability as quickly as possible by working on production and sales with accurate estimates of future demand and achieving optimal inventory levels. We will also make efforts to stabilize operations at the plant, reduce costs, and strengthen external sales, by accelerating cooperation with the Hon Hai Group.
For fiscal 2012 as a whole, the forecast for sales of LCDs has been revised to 900.0 billion yen, up 24.8%, compared to the previous year, and to operating loss of 105.0 billion yen.
(5) Solar Cells
Sales of solar cells were 41.9 billion yen, down 18.2%, compared to the same period in the previous year, while operating loss was 6.9 billion yen.
Despite steady sales in Japan centered mainly on residential applications, prices continued to decline overseas in conjunction with weakening market conditions and intensifying competition. At present, sales remain strong for residential applications, while orders related to power generation projects are on the increase, including mega solar power generation projects being planned against the backdrop of Japan’s enactment of new legislation requiring power companies to purchase all electricity from renewable energy sources which began in July 2012.
Sharp will not only be expanding sales of solar cells and modules, but will also be working to grow its business across the entire value chain, including design, construction, power generation, and maintenance.
The forecast for fiscal 2012 as a whole remains in line with original projections.
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(6) Other Electronic Devices
Sales of Other Electronic Devices were 47.4 billion yen, up 4.2%, compared to the same period in the previous year, due mainly to increased sales of camera modules. At the same time, operating loss was 5.0 billion yen, reflecting price-cutting competition for devices intended for digital consumer electronics, centered on LCD TVs. Sharp will be working to strengthen sales not only for camera modules but also for lighting business such as LED devices.
For fiscal 2012 as a whole, the forecast for sales has been revised to 260.0 billion yen, up 9.2%, and to operating income of 0 yen.
