Sharp profit up 5.5 percent on LCD panel demand

Japanese tech conglomerate Sharp Electronics reported a 5.5 percent rise in quarterly operating profit to a record high, as rivals delayed opening new plants, slowing price declines for the big LCD panels it specializes in.

That more than offset steep TV price falls for Sharp--the world's third-largest LCD TV maker, behind Samsung Electronics and Sony--and higher silicon raw material prices that hurt profits at its solar-cell unit.

Sharp is building the world's largest LCD (liquid crystal display) panel factory in western Japan to boost efficiency and better weather falling prices that have prompted others to delay new production.

However, an economic slowdown in the United States, a key market for its big flat TVs, has cast a shadow over its outlook.

"The U.S. economy will probably be slowing down a bit," Sharp director Tetsuo Onishi told a news conference on Friday.

"But on the other hand, the economy remains robust in China and other BRIC countries," he said. BRIC groups Brazil, Russia, India, and China.

"We will focus on those nations to secure revenues."

Sharp's LCD TV sales in China surpassed those in Europe in December.

Sharp's operating profit totaled a record 51.99 billion yen ($486.57 million) in the October-to-December quarter, up from 49.28 billion yen ($461.21 million) a year earlier and in line with a consensus 52.2 billion yen ($488.54 million) estimate by six analysts.

Net profit rose 3.8 percent to 29.6 billion yen ($277.03 million) on sales of 921.2 billion yen ($8.62 billion), up 12.3 percent. Both of these were also records.

For the full fiscal year ending in March, the company kept its outlook unchanged, topping market expectations.

It forecast an operating profit of 190 billion yen ($1.8 billion), up from 186.5 billion yen ($1.75 billion) a year earlier and above the consensus of 182.5 billion yen ($1.71 billion) in a poll of 19 analysts by Reuters Estimates.

But shares of Sharp could still fall in the short term, said Sohichi Yamazaki, chief analyst at Fukoku Capital Management.

"On the surface, Sharp's growth looks sluggish, compared to its growth in the past and Panasonic's performance," he said, referring to Matsushita Electric Industrial's 22 percent quarterly growth.

"Sharp needs to find more (TV makers) that it can supply its panels to, like it did with Toshiba."

Sharp said in December that it would supply Toshiba with LCD panels, securing a stable and major buyer. In turn, Sharp will buy microchips from Toshiba for use in its TVs.

Japanese consumer electronics maker Funai Electric, which was hit by a shortage of LCD panels last year, told Reuters in December that it might also buy panels from Sharp.

Sharp's announcement follows quarterly results from Taiwan's AU Optronics, the world's No. 3 LCD maker, on Wednesday.

AU also posted a record quarterly profit due to strong LCD demand, a trend the company said will continue into 2008.

Shares in Sharp closed down 0.7 percent at 1,826 yen ($17.09) ahead of the announcement, versus the Tokyo stock market's electrical-machinery index, which lost 0.2 percent.

Sharp shares lost 12 percent from October through Thursday, while the subindex fell 19 percent.

Story Copyright © 2008 Reuters Limited. All rights reserved.

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