Japan's Sharp said Tuesday it will slash employee salaries by up to 10 percent from next month, in a round of cost-cutting that will save it about £112 million during the current fiscal year.
The manufacturer of TVs and display panels for Apple and other companies said the cuts will double a previous 5 percent salary cut for management applied in April. Sharp is also in negotiations with its labour unions to cut union workers' salaries by 7 percent, up from a previous 2 percent cut.
"Business circumstances surrounding the Sharp group are growing even harsher, and improvement of financial strengths for recovery need to be secured," the company said in a statement.
Sharp, which in recent weeks has had to mortgage its key factories and buildings for an emergency loan of about £1.2 billion, and had its credit rating cut to junk status, is fighting to stay operational as it negotiates with Hon Hai, the parent company of Foxconn Electronics, for a much-needed investment in exchange for nearly 10 percent of its shares.
If it can convince unions to accept the pay cuts, the company said it will save about ¥14 billion (£112 million) in the fiscal year through March 2013. The Japanese electronics maker said it will also cut other salary-related items, such as overtime pay and business trips.
The company forecasts it will book a £1.8 billion loss in the current fiscal year. It didn't change its forecast when it announced Tuesday's salary cuts.
The original deal with Hon Hai, announced in March, was cancelled after Sharp's stock price plunged, and the companies have been unable to agree a final deal since.
Sharp, named after the mechanical pencils invented by its founder, will celebrate its 100th anniversary this week. The company's decline and its reliance on a foreign competitor for help is seen as a reflection of the overall decline of Japan's electronics firms.