Sharp returns to first quarter profit on Foxconn’s cost-cut drive, beats estimates

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TOKYO (Reuters) – Japan’s Sharp Corp reported its third consecutive quarter of net profit on Friday, staying on track to achieve its first annual profit in four years following a cost-cutting drive under Taiwanese owner Foxconn.

With a profit recovery firmly underway, Sharp is preparing to take the offensive to regain lost presence in electronics markets.

It is expanding a sales drive of television sets in China and re-entering the Americas TV market with a high-end brand, as it aims to double global TV sales to over 10 million sets in the business year beginning April 2018.

The liquid crystal display (LCD) maker posted profit of 14.48 billion yen ($130.49 million) for the three months through June, reversing a year-earlier loss of 27.45 billion yen.

The result compared with the 7.64 billion yen average of five analyst estimates in a Thomson Reuters poll.

Sharp, a supplier to Apple Inc, maintained its forecast for the year through March at 59 billion yen. It posted a loss of 24.9 billion yen a year prior.

Analysts, however, note that Sharp’s mainstay display panel business could be again swayed by market volatility and price competition with South Korean and Chinese rivals.

Researcher IHS Markit said LCD TV panel oversupply started in the second half of this year and may last until 2018 as inventories accumulate and Chinese firms aggressively expand capacity.

The growing shift to organic light emitting diode (OLED) displays from LCDs among smartphone makers, which reportedly include Apple, will also be a headwind for Sharp.

Sharp plans to spend around 200 billion yen to start mass production of OLED panels in early 2018, lagging far behind the likes of Samsung Display, a unit of Samsung Electronics Co Ltd.

Sharp’s share price ended trade 0.5 percent lower ahead of the earnings, compared with a 0.6 percent fall in the benchmark Nikkei 225 Index.

Reporting by Makiko Yamazaki; Editing by Christopher Cushing