Sharp Corp.

Overview Key strengths Key risks Advanced technology in liquid crystal display (LCD) panels and flat-panel TVs Low likelihood of earnings recovering in the LCD business, which generates one-third of sales, and the home appliance business, which has strong brand recognition Expected financial support in an emergency from parent Hon Hai Precision Industry Co. Ltd. Companywide earnings becoming substantially less stable as revenue from LCD panels and other products fluctuates Potential substitution and technological innovation in LCD panels and devices, in addition to intense competition EBITDA margin likely remaining below industry average amid challenging conditions for its core businesses Debt to EBITDA likely remaining much weaker than that of peers because of considerable total debt The company's earnings are materially less

...S&P Global Ratings believes Sharp Corp.'s business structure will likely remain sensitive to external conditions. The company's earnings are materially less stable because it reconsolidated Sakai Display Products Corp., which manufactures large LCD panels and depends heavily on market conditions. The LCD business posted an operating loss of Ñ66.4 billion in fiscal 2022 (ended March 31, 2023), and of Ñ29.6 billion in the six-month period ended Sept. 30, 2023. We estimate that more than half of the losses are attributable to Sakai Display, which was severely hit by falling prices of large LCD panels, and sluggish demand. In addition, demand for personal computers and other applications that use midsize LCD panels, on which Sharp focuses more than large LCD panels, will likely recover more slowly than we had assumed. Sharp's overall profits are unlikely to substantially recover soon, in our view. We expect the LCD business to continue to record operating losses for the next year or so, unless...

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