Sharp will post losses far beyond analyst predictions as it struggles to survive amidst fierce competition and a fragile economy.
The electronics maker, known primarily for its production of liquid crystal displays (LCDs) used in mobile gadgets -- including smartphones and tablets -- as well as television sets, will post a poor result for the fiscal year due to low factory output. According to Reuters news agency sources, Sharp has been forced to write off excess capacity due to poor production rates, and this will negatively impact the firm's books for the year.
The two unnamed sources say that the Japanese company had a 500 billion yen ($5.1 billion) net loss for the year, which is worse than November's forecast of 450 billion yen.
However, in addition, the sources said that while Sharp forecast operating profit for the second half of the fiscal year to be 13.8 billion yen, it managed to reach 20 billion yen -- a critical aspect for lenders that have bailed out the company and managed to stop Sharp collapsing in 2012.
The company is also reportedly setting aside funds this year pending the result of a price-fixing scheme in Europe involving rival forms including AU Optronics and LG Display.
If Sharp is forced to write off excess capacity from its production sector, then this highlights the slowing down of consumers demand from companies that rely on Sharp's LCD screens for their products. Apple, for example, has seen profit slow down in Q2, and 19,000 new iPhone sales every day led CEO Tim Cook to say this is "currently too low."
Sharp curtailed production of Apple's 9.7-inch screens for the iPad at the start of the year.
A number of firms, including Qualcomm and Samsung have invested in Sharp in order to keep LCD display production alive. Qualcomm and Sharp have agreed on a joint venture to produce power-conserving screens -- the latter receiving funds of $120 million as part of the deal -- and Samsung has paid 10.4bn yen ($112m) for a three percent stake in the Japanese electronics maker.
Sharp will announce its financial results for the year on May 14.