Measures to Improve Business Performance in Fiscal 2012
The following is an explanation of the company’s measures to improve business performance in fiscal 2012, based on the current business environment and our financial results. Sharp will work at measures in four areas in order to improve business performance in fiscal 2012.
The first area is the improvement of our financial strength, which has been damaged by the downturn in performance. We will focus on four priority measures: a reduction of inventory, a reduction of total costs, the suppression of capital investment, and a reduction of fixed assets.
The second area is structural reform of the Audio-Visual business and our domestic sales and marketing framework which have depended heavily on the domestic LCD TV business. Now that there has been a rapid decline in the market, it is essential for us to respond to the change in the market environment. We will seek to strengthen our profitability by shifting personnel and other management resources to growth areas and new businesses.
We expect high future growth overseas for products such as large-size LCD TVs and Plasmacluster products. Also, the importance of the emerging nations is increasing and the strengthening of Sharp’s organization and personnel for these areas is an urgent task. We will shift our management resources to these overseas businesses, and also to business fields such as Health and Environmental Equipment and B2B.
The third area is restructuring of the solar cell business. The solar cell business is in an extremely difficult environment. However, a feed-in tariff will begin in Japan in July 2012, based on a bill on special measures for renewable energy. This is expected to spur growth in Japan, where Sharp has a large market share, for conventional residential applications as well as for the power generation business, which includes large-scale solar power generation systems.
We will seek to improve profitability by taking measures to turn around our profit structure and business structure. We aim to increase expansion into downstream business areas, including the power generation business, as well as continuing to promote local production for local consumption.
The final area for improvement is in the steady progress of the LCD business restructuring. The main factor behind the large downward revisions of forecasts for fiscal 2011 was the LCD-related business, including TVs. Two major issues we face are the significant delays in development and shipment of IGZO LCDs in mobile LCDs and the decline in sales and reduced plant utilization rates for large-size LCDs.
We have promoted an LCD business restructuring by strengthening mobile LCDs using our unique technologies and by expanding business for large-size LCDs of 60 inches and larger. In order to overcome the issues confronting us at present—and to improve profitability over fiscal 2011 levels—we will solidly promote these measures as we work to expand the IGZO LCD business and the applications that use this technology, and as we shift focus to super-size LCDs of 60 inches and larger. We will also take measures to optimize the production framework, in order to achieve these objectives and to stabilize plant utilization.
At the Kameyama No. 2 Plant, we are advancing a shift to mobile LCDs through the introduction of IGZO technology. The mass production and shipment of LCD panels using this technology was delayed from the initial schedule, but it is now planned that shipments will begin from February 2012. We will also expand the use of IGZO LCDs from tablet terminals to applications with larger screen sizes, such as high-resolution LCD monitors. We believe that we will be able to improve profitability by steadily advancing this transition.
External sales of LCDs manufactured at the Sakai Plant were sluggish due to the worsening of the global supply/demand environment. For this reason, from now on we will concentrate almost completely on internal demand for production of LCDs for TVs. We also plan to lower utilization of the Sakai Plant to around 50% in order to achieve appropriate inventory levels.
Also, with the expansion of applications for IGZO LCDs to notebook PCs and high-resolution monitors, we can expect the growth of business for these products. We will therefore take the opportunity of the reduced production to consider the introduction of IGZO technology to some of the production lines at the Sakai Plant.
Sharp will make efforts to expand business and improve profitability from fiscal 2012 onwards, by steadily continuing the LCD business restructuring and responding flexibly to changes in the business environment.
|
|