* Sharp logs first profit in three years
* Solar cell orders expected to slump
* Division to fall into red in FY 2014/15 (Adds president quotes, details of LCD and solar business earnings, smartphone panel production)
By Sophie Knight and Reiji Murai
TOKYO, May 12 (Reuters) - Japanese display maker Sharp Corp expects its operating profit to fall this year as the benefits of a weaker yen recede, taking some of the shine off its recent return to profit following a painful restructuring.
Asian rivals are keeping up competitive pressure in flat-panel TVs and TV screens, but Sharp said it expected to end this year in the black thanks to the prolonged turnaround drive and strong demand from Chinese smartphone makers.
Shares in the supplier of screens for Apple Inc's iPhone have fallen 22 percent this year, compared with a 13 percent drop in Tokyo's benchmark Nikkei average.
The company acknowledged it still had far to go to turn around its fortunes, after racking up more than $9 billion in combined losses over two years before climbing back into the black for the year just ended on March 31.
"We are still resetting and starting from zero," said President Kozo Takahashi. "I think we still need to make a company structure that can withstand changes in the market and the environment."
Sharp projected an operating profit of 100 billion yen this year, in line with the 98.7 billion yen average forecast of 15 analysts according to Thomson Reuters I/B/E/S but down 8 percent from the prior year.
Net profit was seen rising to 30 billion yen from last year's 11.6 billion yen, as it shed last year's heavy burden of restructuring costs.
Its equity ratio, a closely watched indicator of its financial health, shrank markedly in the January-to-March quarter from the prior three months as it provided for retirement obligations, but a senior executive said its profit situation was sound enough that it would not have to tap wary markets for more funds.
"The drop in our equity ratio below 10 percent at the end of the (2013-14 financial) year was within expectations," said representative director in charge of finance Tetsuo Onishi at an earnings briefing.
The company's equity ratio was at 8.9 percent on March 31, down from 13.9 percent at the end of December and below the 20 percent considered healthy.
"We will raise the equity ratio through retained earnings. We have no plans regarding equity," said Onishi.
A Japanese media report last month that Japan's largest display maker would tap the equity markets to raise 200 billion yen and bolster its balance sheet sent its shares tumbling to their lowest in more than a year.
The company's solar cell business is expected to shrink 33.9 percent this fiscal year, dragging the segment to a 5 billion yen operating loss.
By contrast, Sharp forecast profit from its LCD panels would rise 32 percent this year to 55 billion yen ($540.75 million) as it boosts the proportion of its production capacity devoted to making higher-margin smartphone screens, away from more commoditised TV screens.
The company fell short of its target to boost the share of small-screen output at its Kameyama 2 factory to 39 percent in the January-March quarter, reaching only 28 percent, but Takahashi was confident it could still reach at 50 percent target within the six months to Sept. 30.
"Looking at orders, we should be at 35 percent for May and so I think we can make it to 50 percent for the first half," he told reporters after the earnings briefing.
He added that Sharp would cope with falling smartphone panel prices by cutting costs and improving automation technology. ($1 = 101.71 Japanese yen) (Editing by Edmund Klamann and Tom Pfeiffer)