At last week’s PV Expo in Tokyo, Sharp presented a range of solar products including its high-efficiency black/black module that is produced in Japan. The company has relied heavily on OEM production elsewhere in Asia for supplying multicrystalline modules to the strong Japanese market. There are indications that these arrangements may no longer be profitable on the back of the weak yen.
Given this and the need for the company to rapidly raise cash as its debt-to-equity ratio continues to deteriorate on a corporate level, a sale of its solar assets and business looks increasingly likely.
"Sharp is not healthy at the moment, RTS Corporation’s Izumi Kaizuka told pv magazine. "I think Sharp outsourced manufacturing to overseas companies and with the very weak yen over the last year, it is losing money."
Reports in the Japanese media regarding Sharp’s moves to find an investor in its solar business have begun to proliferate. In writing on the company’s expected move to request a debt-for-equity swap from two major lenders, the Nikkei Asian Review wrote that it is likely Sharp is looking to its solar segment to generate cash through a sale.
"Sharp will also seek a buyer for its solar panel business with an eye toward an exit," wrote the Nikkei Asian Review yesterday.
In conversations with Japanese PV insiders, pv magazine has learned that Sharp has opened its books to at least one other major Japanese domestic solar producer in pursuit of a sale of its solar business. pv magazine understands that after some weeks of consideration and review, the manufacturer decided against purchasing Sharps solar business due to its lack of profitability.
The industry insider, speaking on the condition of anonymity, told pv magazine that the various business entities within Sharps solar operations on the whole were unprofitable despite the companys extremely strong brand presence and impressive domestic market share.
The Japanese PV market appears to be declining after two years of booming demand. While the decline of the market is not expected to be precipitous, margins are shrinking as competition heats up, particularly from Chinese suppliers.
"In the large-scale module segment, price competition is quite tough because of the presence of the Chinese companies," Kaizuka said.
Sharp has denied reports that it is seeking a buyer for its solar business, in a statement issued today.
"Recently, there were media reports regarding Sharp’s solar cell business. However, these reports are speculations and not based on Sharp’s announcement.
We are currently undergoing fundamental structural reforms for the recovery of the profitability of solar business, but there are no fact of Sharp to withdraw from solar business at this time," the statement reads.
The Nikkei Asian Review reports that Sharp will announce its earnings outlook and structural reforms to its major lenders as early as this week.