Sharp to cut 6,000 jobs, spend over USD1.7b to restructure
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Japan’s loss-making electronics firm Sharp plans to cut around 6,000 jobs, over 10 percent of its workforce, in a global restructuring that will cost over 200 billion yen ($1.7 billion), a person familiar with the plan said on Thursday.
The job cuts will include around 3,000 in Japan through early retirement and 3,000 overseas, according to the person, who was briefed on the matter but asked not to be named. The company had around 50,000 employees at the end of 2014.
The display maker expects to post its third annual net loss in four years after weak sales of smartphone screens in China, aggravated by an unexpected comeback by rival Japan Display, derailed its recovery efforts. Last month it forecast a net loss of around 30 billion yen for the fiscal year ending in March, compared with the 30 billion net profit it previously estimated.
Sharp Chief Executive Kozo Takahashi has been in negotiations with the firm’s main lenders, Mizuho Financial Group, Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ, part of Mitsubishi UFJ Financial Group, for the company’s second major bailout since 2012, people familiar with the matter have said.
The firm’s banks agreed in September 2012 to provide Sharp with loans and credit lines worth 360 billion yen, or $3 billion at today’s exchange rates, in exchange for promises to return to profit by this year. So far, it has exited the European TV market and closed solar-panel businesses in Europe and the United States.
One person familiar with the matter previously said Sharp has also asked Japan Industrial Solutions, a corporate turnaround fund, to invest up to $250 million in capital.
The Nikkei reported earlier on Thursday that Sharp could also shed its North American television business and lower the pay scale for workers in Japan. The Yomiuri newspaper reported Sharp was considering closing its TV factory in Mexico and cutting the size of its North American sales division.
The company, which is expected to include the restructuring plan in a medium-term business strategy due to be announced in May, said it was considering various options to restructure its business but no decisions had been made.
Questions & Answers
Q.When will Sharp officially announce its restructuring plan?
When will Sharp officially announce its restructuring plan?
The company is expected to include its restructuring plan in a medium-term business strategy. This strategy is due to be announced in May, but no final decisions have yet been made.
Q.What is the total number of jobs Sharp plans to cut globally?
What is the total number of jobs Sharp plans to cut globally?
Sharp plans to cut around 6,000 jobs as part of its global restructuring efforts. This represents over 10 percent of its workforce, which stood at about 50,000 employees at the end of 2014.
Q.Why is Sharp posting another net loss?
Why is Sharp posting another net loss?
Sharp expects to post a net loss due to weak sales of smartphone screens in China. This situation was made worse by a strong comeback from its rival, Japan Display, derailing recovery attempts.
Q.Which businesses has Sharp already exited or closed to improve its finances?
Which businesses has Sharp already exited or closed to improve its finances?
Sharp has exited the European TV market and closed its solar-panel businesses in both Europe and the United States. It is also reportedly considering shedding its North American television business.
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