Sharp warns of USD-142m charge on solar deal in Italy

Jul 11, 2014 - Japan’s Sharp Corp (TYO:6753) today said it would book an extraordinary loss of JPY 14.38 billion (USD 142m/EUR 104m) in the March-June quarter as it will stop solar cell purchases under a long-term contract in Italy.

In 2010, the electronics giant teamed up with Italian utility Enel Green Power (BIT:EGPW) and Franco-Italian chip maker STMicroelectronics (EPA:STM) to form a joint venture in Italy, 3Sun Srl, to make thin film solar cells. In 2011 Sharp and Enel agreed to buy the produced cells under long-term supply deals, with the intention to sell the product in Europe, the Middle East and Africa.

Now the Japanese company has reached an agreement with Enel Green Power to take on Sharp’s solar cell purchase commitments under the contract with 3Sun as of July 15 in exchange for a “certain consideration”. Sharp will satisfy part of that consideration by transferring to Enel its equity interest in their 50/50 solar park joint venture Enel Green Power & Sharp Solar Energy Srl (ESSE).

The move is due to the significant drop in module prices that was “more sudden than expected”, Sharp explained today, as well as the weakening of the European economy and the reduced feed-in tariffs in key target markets.

Sharp noted that it would not revise its forecast for the second quarter of its fiscal year, which will end on March 31, 2015, for now. It expects certain positive effects from the transaction with Enel.

(JPY 100 = USD 0.987/EUR 0.725)

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