Sharp Corp, an Apple Inc supplier, said on Thursday it expects operating profit to rise 18.8 percent this year, well below a target it set two years ago.
The far weaker outlook comes at a time when parent Foxconn, the world’s largest contract manufacturer, tries to reinvent itself by cutting dependence on iPhone maker Apple as smartphone sales plateau.
Electronics maker Sharp forecast operating profit of 100 billion yen (698 million pounds)for the year to March 2020, from 84.1 billion yen a year earlier.
Osaka-based Sharp, which provides screens and camera modules for iPhones, targeted profit of 150 billion yen two years ago by boosting sales of television sets through the business networks of Foxconn, formerly Hon Hai Precision Industry Co Ltd.
The once-struggling Japanese company achieved a dramatic turnaround after being taken over by Foxconn in 2016, slashing costs and taking advantage of its parent’s vast purchasing and sales networks.
However, its brand image suffered from its focus on lower-end markets, particularly in China, while a slow move to organic light emitting diode (OLED) panels from liquid crystal displays (LCD) also hurt.
Sharp changed tack, deciding not to pursue sales volume, and as a result is set to miss its three-year profit target.
During the fourth quarter ended in March, the electronics maker posted 15.8 billion yen of operating profit, compared with 19.7 billion yen in the same period a year earlier.
Executive Vice President Katsuaki Nomura said at a briefing that quarterly earnings were affected by demand fluctuation of a major client and trade tension between the United States and China.―Japan Today