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October 26, 2005 4:32 pm

Sharp sticks to record forecast

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Sharp on Wednesday announced a drop in first-half profits, highlighting the impact of price pressures in the semiconductor sector. But the group forecast record sales and profits for a third consecutive year.

The world’s largest maker of LCD TVs said sales grew in the period, supported by higher sales of LCDs and advanced mobile phones. However profits declined significantly in its semiconductor division, reflecting a fall in prices.

Sharp reported a 4.5 per cent rise in sales to Y685.4bn ($6bn) but a 3.2 per cent decline in operating profits to Y75bn and a 7.2 per cent drop in net profits to Y36.4bn.

But the group said the market environment was improving and it expected to achieve its forecast of record sales and profits for the full year.

“The second half of last year was the bottom and we have seen more than double-digit growth in sales and operating profits in the second quarter compared with the first quarter, so things are getting better,” Sharp added.

Although the semiconductor market has been affected by price declines for products such as flash memory, Sharp was helped by buoyant demand for LCD panels, LCD TVs, solar batteries and mobile phones.

Sharp has already increased capacity at its state-of-the-art LCD plant by 13 per cent to 51,000 panels a month to meet increasing demand, but yesterday said it could raise capacity further.

“The shift to large LCD TVs is gathering pace,” Sharp said. The ratio of sales of LCD TV of 30 inches or more had risen from 20 per cent of its overall LCD TV sales to 35 per cent, it said.

Strong demand for mobile phones is another factor behind Sharp’s confidence in achieving record results. Sharp revised up its mobile phone sales forecast for the year by Y10bn to Y420bn.

The group enjoyed firm demand for its high-end mobile phones in Japan and overseas markets, where demand is shifting to 3G phones and those with advanced features.

■ NEC Electronics on Wednesday said Kaoru Tosaka, its president, would resign to take responsibility for the group’s poor performance. NEC Electronics, 70 per cent owned by NEC, reported a Y7.88bn net loss in the first half and forecast a Y20bn net loss for the year, compared with an earlier forecast of a Y5.5bn profit.

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