Ahead of an impending takeover by Taiwan's Foxconn, Japan's electronics giant Sharp posted massive losses in its annual earnings last fiscal year. The major LCD manufacturer announced on Thursday a net loss of Â¥256 billion ($2.37 billion) for the fiscal year ending March 31, 2016.
Sharp said its operating loss more than tripled from Â¥48.1 billion last year to Â¥162 billion ($1.5 billion) in FY2016. But the results were better than Sharp's forecast in March, which had estimated an annual operating loss of Â¥170 billion.
After reporting its annual losses â€” the first earning result since Foxconn agreed to take over Sharp in a $3.5-billion stake deal in March â€” the LCD-maker named Foxconn vice-chairman Tai Jeng-wu as its new president, replacing Kozo Takahashi, Reuters reported. Jeng-wu, who is fluent in Japanese, played a key role in the takeover negotiations. The deal is expected to be closed by the end of June, Takahashi said.
Sharp did not share the earnings estimates for its current fiscal year ending March 2017. According to Bloomberg, an average from nine industry analysts put Sharp's net loss to a narrowed-down figure at Â¥18.6 billion. Sharp's plans after Foxconn's takeover include a sizeable investment of Â¥200 billion into the production of next-gen OLED screens and another Â¥60 billion into the production of existing LCD operations.
Sharp's biggest competitors are Samsung Display, which leads the market for small and midsize screens, Japan Display and LG Display. With the help of Foxconn's financial backing, Sharp might be able to gain some ground from its rivals.
According to Market Watch, Sharp is expected to be removed from the Tokyo Stock Exchange's first section to the subordinate class in August due to its net capital deficiency.
"While we find ourselves with excessive debt, this strategic alliance will not only bring capital, but also a powerful business relationship that could bring stability," President Kozo Takahashi was quoted as saying by Bloomberg. "We are counting on considerable synergies."
The Osaka-based electronics manufacturer has been hit by the declining demand for its display technology, resulting in damaging financial trouble. The company had even come close to bankruptcy in 2012 and received two major bailouts in the last four years, BBC pointed.