Sharp Corp.

This report does not constitute a rating action. Overview Key strengths Key risks Relatively high technological capabilities and brand power as a major manufacturer of white goods Limited near-term earnings recovery in the small- and medium-size LCD business, 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 Significantly vulnerable financial profile due to weak cash flow generation and heavy debt Inadequate provision for the repayment of bank loans due in April 2026 Sharp Corp. is making good progress in its restructuring efforts, which began 2024,

...Sharp's performance will remain on a moderate recovery track for the next year or two, in our opinion. Sharp Corp. is making good progress in its restructuring efforts, which began 2024, S&P Global Ratings believes. This includes selling its Sakai factory, which used to manufacture large liquid crystal display (LCD) panels. Its small- and medium-size LCD panel business will likely narrow its losses, owing to an increase in the production of higher-margin panels for automobiles and gaming. We expect the company's brand businesses, such as home appliances and office equipment, to generate relatively stable profits, albeit at a low level, through higher value-added products and lower costs. Based on this, we forecast the company's operating profits (after our adjustments) will total Ñ25 billion in fiscal 2025 (ending March 31, 2026) and will continue to improve thereafter (see chart 1). Nonetheless, it is our assumption that its brand business is subject to severe competition and will remain...

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