Sharp Corp.

Overview Key strengths Key risks Relatively high technological capabilities and brand power as a major manufacturer of white goods Near-term earnings recovery in the LCD business unlikely as it continues to suffer operating losses Expected financial support in an emergency from parent Hon Hai Precision Industry Co. Ltd. Many core businesses exposed to fierce competition and risks of substitution and innovation EBITDA margin likely remaining below industry average amid challenging conditions Major cash flow-related indicators will continue to deteriorate significantly due to deterioration in profitability and heavy debt Equity has declined steeply and could fall further if recovery slows, or the yen appreciates Sharp's large liquid-crystal display (LCD) business recorded significant operating losses and impairment loss for fiscal 2022 (ended

...S&P Global Ratings believes Sharp Corp. is likely to register operating losses over the next several quarters. Sharp's large liquid-crystal display (LCD) business recorded significant operating losses and impairment loss for fiscal 2022 (ended March 31, 2023) and fiscal 2023. Such losses are likely to narrow significantly as it stopped producing large LCD panels at the Sakai plant (owned by Sakai Display Products Corp) and withdrew from the business. Sharp's small and midsize LCD panel business also suffered a significant operating loss in fiscal 2023 and will continue making losses for at least the next year. The company will take measures to streamline, such as fixed cost reductions and optimization of production plants. However, we believe it will not be easy to substantially restore the profitability in this business, which is less competitive than that for organic light emitting diode (OLED) displays. Although profits from the consumer electronics and brand businesses are recovering,...

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