March 30, 2015 / 7:19 AM / 3 years ago

Japan's Sharp won't exit solar business as part of bank bailout: executive

A worker works along the production line of the solar cell at Shap Corp's Sakai plant in Sakai, western Japan March 30, 2015. REUTERS/Reiji Murai

SAKAI, Japan (Reuters) - Loss-making Japanese electronics firm Sharp Corp said it plans to keep making solar cell products at a high-tech factory in western Japan, dismissing talk it may sell or exit the unprofitable business as it seeks backing from lenders for plans to revive the company.

“There is no truth to talk that we will quit, or sell, the solar business,” Kazushi Mukai, head of Sharp’s energy operations, said on Monday during a tour of the solar cell plant in Sakai. Sharp expects a loss of 5 billion yen ($42 million) at its solar business for the fiscal year ending March 31.

Mukai’s comments come as Sharp, on track for its third annual net loss in four years, seeks to negotiate its second major bailout since 2012. Sources say its banks are seeking a radical overhaul and an exit from loss-making businesses in return for new funding.

A spokesman for the company said it will announce any possible restructuring measures, as part of a long-term business plan, in May.

Sharp’s solar cell business, once a leader in the global photovoltaic industry, has been squeezed by tough competition on pricing from rivals in China. The division, along with Sharp’s also-ailing TV and liquid crystal display operations, have been tipped by analysts as possible targets for cutbacks or a sell-off.

On Monday Mukai said he planned to turn the unit profitable in the new business year from April by improving the efficiency of its supply chain. In the longer term, he said, the division can grow stronger by expanding exports from Japan and stepping up production of more advanced photovoltaic modules.

He denied the unit was fundamentally lacking in competitiveness, saying the expected loss for the fiscal year ending March 31 was mainly due to the yen’s rapid decline. “The business structure itself is not loss-making,” he said.

Sharp recently announced it will sell its U.S.-based solar energy development unit, Recurrent Energy, to Canadian Solar. Since last year, Sharp has also shut its British solar plant and pulled out of a solar power venture with Italy’s Enel SpA, effectively exiting solar plant production overseas.

Reporting by Ritsuko Ando; Editing by Chris Gallagher, Clarence Fernandez and Kenneth Maxwell

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