SHCAY Sharp Corporation (PK)

TOKYO—Sharp Corp. slashed its earnings forecast for the current fiscal year on Monday, citing worse-than-expected performance in its smartphone display-panel business due to intensifying competition, especially from China.

For the full-year ending in March, Sharp restated its operating-profit guidance to 10 billion Japanese yen ($82.7 million), down from the previous forecast of ¥ 80 billion. Revenue guidance was revised down to ¥ 2.7 trillion from ¥ 2.8 trillion.

"Prices of display panels for smartphones sold in China have declined and our sales have slowed," Sharp said in a statement.

The Osaka-based electronics maker has been implementing a wide range of restructuring measures, such as job cuts, selling buildings in Osaka including its headquarters and pulling back from some overseas markets.

As a supplier to Apple Inc., display-panel manufacturing has been a core business for Sharp, but the unit was hit hard as competitors eroded the company's customer base with cheaper offerings.

After obtaining its second bailout in three years from banks in May, Sharp's chief executive Kozo Takahashi pledged that he would speed up overhaul efforts and that the company would turn around by the second quarter, with a projected profit of ¥ 10 billion for the April-September period. That figure was revised to a loss of ¥ 26 billion on Monday.

The downgrade was expected because Sharp's turnaround plan was seen as too optimistic when it was announced. Mr. Takahashi admitted in July the plan may need some adjustment as market conditions in the display-panel business were "worsening at a faster pace than we had expected."

Sharp's share price rose 0.74% Monday.

The company will report second-quarter earnings on Friday, with analysts focusing on any updates on the panel business.

Sharp is in discussions with Japan Display Inc. and Hon Hai Precision Industry Co. over possible investments in its smartphone panel business, according to people with knowledge of the matter. Sharp executives, including Mr. Takahashi, have said the firm won't rule out any possibilities, including giving up majority control of the unit.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

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(END) Dow Jones Newswires

October 26, 2015 06:15 ET (10:15 GMT)

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