Sharp Expects Loss at Solar Unit on Drop in Overseas Projects

May 12, 2014 3:10 am ET

May 12 (Bloomberg) -- Sharp Corp. expects lower sales and a loss at its solar unit this fiscal year amid cost pressures, a drop in overseas projects and slower sales to the residential market in Japan.

The unit’s loss is projected at 5 billion yen ($49 million) for the year ending March 31, compared with a 32.4 billion yen profit a year earlier, according to a statement from the Osaka- based company. Sales will drop 34 percent to 290 billion yen, according to the filing.

“A significant drop in sales and an operating loss are anticipated due to decreases in the number of overseas developer business projects and sales of domestic residential applications as well as an increase in imported component and material costs due to the yen depreciation,” the company said in the statement.

For the three-month period ended March 31, Sharp’s solar business posted 16.5 billion yen in operating profit. Sales for the unit totaled 162.1 billion yen in the period.

The company, which also makes the Aquos TV, expects to sell 2,000 megawatts of solar products this fiscal year, slightly below the previous year’s 2,098 megawatts.

Japan’s photovoltaic market has been expanding after the Fukushima nuclear disaster in March 2011. The country has added 7,414 megawatts of solar capacity since an incentive program for clean energy began in July 2012, according to the latest data from the trade ministry. That represents about a quarter of the approved capacity for solar projects in Japan.

Japan will add 9,300 megawatts to 11,800 megawatts of capacity this year to become the second-largest solar market behind China, according to a report by Bloomberg New Energy Finance in February.

While the Japanese market is booming, Sharp is scaling back panel manufacturing abroad. Sharp stopped making solar panels at a plant in Tennessee and at a U.K. factory in Wales following earlier announcements, according to Miyuki Nakayama, a Sharp spokeswoman.