Japanese electronics giant Sharp on Tuesday posted a record annual loss for the second year in a row, and announced plans to replace its current chief after just one year on the job.
A customer checks LCD television sets by Japanese electronics maker Sharp at an electronics shop in Tokyo, on March 6, 2013. Sharp on Tuesday posted a record annual loss for the second year in a row, although it added that it expected to return to profitability in the current fiscal year.
The maker of Aquos-brand electronics reported a net loss of 545.3 billion yen ($5.4 billion) in the year to March, its worst-ever shortfall after losing 376 billion yen in the previous year.
However, Sharp said it expects to return to profitability in the current fiscal year.
"We apologise for having to book huge losses for two straight years," Sharp Executive Director Tetsuo Onishi said after the disappointing figures were published.
Sharp, which is undergoing a massive restructuring, said company veteran Kozo Takahashi would become its new president, replacing Takashi Okuda who was set to become chairman, a title that often precedes retirement in big Japanese companies. Okuda was appointed to the top job in April last year.
The changes are part of a wider management shuffle at the firm which said the record net loss was largely due to charges stemming from its wide-ranging overhaul.
However problems in its long-suffering television business showed few signs of abating as sales "fell drastically", it said.
Sharp blamed the downturn on sluggish demand at home and in key market China, where a consumer boycott of Japanese brands erupted last year over a territorial spat between Beijing and Tokyo.
"Mobile phone sales also declined, due mainly to supply shortages of key components in the first half of this fiscal year and severe competition with overseas manufacturers," Sharp said.
On a more positive note, demand for Sharp's liquid crystal display panels jumped on big demand for small and medium-sized LCDs used in smartphones and tablets, it said.
Sales in the latest period were 2.48 trillion yen, up from 2.46 trillion a year earlier, Sharp said, adding that it was on track to eke out a small 5.0 billion yen net profit in the current fiscal year to March 2014.
But "we anticipate the overall business environment will remain unpredictable", it added.
Koki Shiraishi, an analyst with SMBC Nikko Securities, said Sharp won't be able to turn itself around without rolling out more "competitive products".
"Sharp still needs further restructuring, which will haunt the company at a time when few companies can expect big sales given the current business conditions," Shiraishi added.
The results cap off another tough earnings season for a company which last year warned over its survival and put up its Osaka headquarters as collateral to land crucial bank loans.
Sharp has since backed off from bleak talk of the century-old firm going under as it embarks on a painful restructuring including thousands of job cuts and slashing wages from the factory floor to the boardroom.
It has also inked capital tie-up deals with foreign firms including South Korea's Samsung Electronics and US-based Qualcomm.
Japan's major electronics firms, including Sharp rivals Sony and Panasonic, have been hammered by credit rating downgrades and record losses as they struggled in the low-margin TV business where foreign rivals have proved tough competition.
Slowing demand in key export markets, strategic mistakes and a strong yen have also pounded their finances.
But a tumble in the Japanese currency in recent months has helped Japan's exporters, making their products move competitive overseas and boosting the value of repatriated foreign income, inflating their bottom line.
Sony last week posted a full-year profit after four years in the red, while Panasonic logged an eye-watering 754.25 billion yen net loss for the same period, but pledged to turn a profit over the next year.
Sharp's Tokyo-listed shares closed up 4.94 percent at 531 yen on Tuesday with its results released after markets closed.