Sharp Corp.

The stable outlook reflects our view that Sharp's consolidated profitability and key cash flow ratios will remain stable for the next one to two years. Supporting our view are Sharp's efforts to enhance its non-LCD businesses and control earnings volatility in its LCD business despite challenging conditions. We may consider a downgrade if we see a heightened likelihood of either of the following scenarios: Its EBITDA margin consistently falls short of 6% because of a sharp deterioration in the LCD business environment; or Debt to EBITDA consistently exceeds 5.5x owing to a substantial increase in growth investments despite a slow recovery in earnings. We may consider an upgrade in either of the following situations: Its EBITDA margin approaches 9% thanks

...S&P Global Ratings expects Sharp Corp.'s overall performance to remain stable for the next one to two years, supported by its strong home appliance business. We believe Sharp will continue to enhance its portfolio across an array of products, although it will likely reap progressively fewer benefits from demand from homebound consumers. The company is also expanding its marketing network for products used in business-to-business transactions, for which demand fluctuates relatively little. Operating profit of its home appliance business is likely to continue to underpin overall earnings, in our view. Profits from Sharp's core LCD business will recover moderately. We expect a recovery in auto sales to replenish demand for midsize panels gradually--cars are one of the main uses of LCDs. Downside risk to earnings will likely be limited despite an ongoing shift toward organic light-emitting diode (OLED) panels, because the demand-supply balance of small panels for smartphones has stabilized....

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