FINANCIAL ROUNDUP: Sharp Announces Big Losses, Plans Thousands of Job Cuts Steve Jennings, Getty Images

FINANCIAL ROUNDUP: Sharp Announces Big Losses, Plans Thousands of Job Cuts

With sales down almost 5% and more than a quarter of its market value gone after recent reports, Sharp's president says company is facing 'an extremely difficult situation.'

TOKYO — Japanese electronics giant Sharp announced plans to cut thousands of jobs Tursday in a fresh turnaround plan to keep it afloat after posting a bigger-than-expected $1.86 billion annual loss.

The 222 billion yen net loss — much bigger than an earlier 30 billion yen ($25.17 million) forecast — came as Sharp said it would cut about 10% of its 49,000-strong global workforce, including 3,500 jobs in Japan. The firm said it hoped to swing to an 80 billion yen ($67.13 million) operating profit in the current fiscal year, but it did not give a net profit forecast.

Sharp – a major Apple supplier and leader in screens for smartphones and tablets – also said it would issue 200 billion yen ($1.67 billion) worth of new shares with no voting rights to Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ as part of its bid to repair a badly damaged balance sheet.

“Our company is facing an extremely difficult situation,” president Kozo Takahashi told reporters. “By implementing these structural reforms, we believe we can see a concrete path toward recovery.”

Sales in the last fiscal year fell 4.8% to 2.78 trillion yen ($23.31 billion), Sharp said.

On Monday, the company lost more than a quarter of its market value following reports that it was planning a drastic capital reduction and the sale of preferred shares, spooking investors who worried about their holdings being diluted. The stock lost 0.99% to close at 200.0 yen on Thursday in Tokyo, before its results were released.

STOCK MARKETS: HONG KONG — Tokyo’s Nikkei index was the biggest loser of Asia’s major markets Thursday as the yen climbed against the dollar, while Wall Street provided a weak lead following more below-forecast U.S. data. The euro added to recent gains after data showing the eurozone economy picking up trumped worries about Greece’s ongoing debt reform talks.

Tokyo sank 0.98%, or 194.48 points, to 19,570.24 while Sydney eased 0.33%, or 18.6 points, to 5,696.5 and Seoul added 0.29%, or 6.17 points, to 2,120.33. Hong Kong climbed 0.14%, or 37.27 points, to 27,286.55 and Shanghai was slightly higher, adding 2.55 points to 4,378.31

U.S. traders were left disappointed Wednesday after the Commerce Department said retail sales, a key part of consumer spending that drives most of the US economy, stagnated in April after rising 1.1% in March.

HITACHI: TOKYO — Hitachi said Thursday that its annual profit fell, owing to a one-off surge a year earlier, but it forecast a rebound this year. The Japanese conglomerate, which sells everything from lifts to nuclear plants, said its net profit was down 8.9% at 241.3 billion yen ($2.02 billion) in the 12 months to March, largely due to year-earlier gains it booked from a reorganization of its thermal power generation unit.

Operating profit in the just-ended year rose nearly 12% to 600.48 billion yen ($5.04 billion) on sales of 9.76 trillion ($81.90 billion) yen, up 2.1%, Hitachi said, crediting strong demand for its lifts in China and strong sales of auto parts and electronics products.

In February, Hitachi said it would buy the rail and traffic signal businesses of Italy’s Finmeccanica, in a deal that could reach more than $2.0 billion as it looks to take on global rail giants.

TELEFONICA: MADRID — Telefonica, Europe’s second-largest phone company, said Thursday its sales rose 12.6% to 11.54 billion euros ($13.14 billion) and its net profit more than doubled in the first quarter thanks to a one-off financial boost from the sale of its British unit O2.

The carrier posted a forecast-beating net profit in the period of 1.8 billion euros ($2.05 billion) up from 688 million euros ($783.09 billion) during the same time last year. Analysts contacted by financial information services provider Factsheet had predicted a first quarter result of 669 million euros ($761.47 million).

Telefonica in March sold British telecom giant O2 to Hong Kong group Hutchison Whampoa for 14 billion euros ($15.94 billion). Proceeds from the sale of O2 have been largely earmarked to reduce Telefonica’s debt pile which stood at 45.6 billion euros ($51.90 billion) at the end of March.

INDIA: MUMBAI — India’s wholesale inflation dropped for a sixth straight month as fuel prices and manufacturing costs continued to ease, government data showed Thursday.

The Wholesale Price Index (WPI), an inflation indicator which measures the biggest basket of goods, fell a sharper-than-expected 2.65% in April from a year earlier. The fall was bigger than the 2.30% slip predicted by a Bloomberg survey and follows a 2.33% decline in March.

The WPI data comes two days after figures showed consumer inflation was at its lowest level in four months and factory output was sluggish. The weak economic indicators strengthen the case for more interest rate cuts from the Reserve Bank of India (RBI), analysts said.

Copyright Agence France-Presse, 2015

TAGS: The Economy
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