According to "Nihon Keizai Shimbun" reported on May 17, large-scale LCD company, Japan Display Corporation, ushered in a crucial juncture for the reconstruction. The company's consolidated financial statements for fiscal year 2017 (as of March 2018) released on May 15 showed that the final profit or loss was a loss of 247.2 billion yen (a loss of 31.6 billion yen in 2016 fiscal year), the worst loss in history. Although the fiscal year 2018 (as of March 2019) is expected to turn profitable, the competition between JDI and Chinese and South Korean companies has become increasingly fierce and the road to reconstruction is still uncertain.
'The company that became a profitable organization through structural reforms', JDI President and Chief Executive Officer (CEO) East Inagi Shinbo emphasized the significance of the worst losses in history in the press conference held on the 15th. The main reason for the loss was the structure. The cost of reforms swelled. The loss of production equipment and inventory losses reached 143.7 billion yen.
However, due to the impact of four consecutive quarterly losses, the net assets that played a buffer role in sustaining losses were reduced to 117 billion yen even when the capital increase in April was calculated. The ratio of own capital showing safety was reduced to 17.8%. .
More severe is the decline in the ability to earn cash. As major customers Apple iPhone X introduced in the fall of 2017 using organic EL panels, JDI's LCD panel sales decreased. The operating cash flow showing the main business earning capacity in 2017 decreased 700 million yen (in 2016 fiscal year, an increase of 112 billion yen). In fiscal year 2017, the main business failed to earn cash, and the capital turnover had to rely on banks and other financial institutions.
It is expected that JDI's sales in fiscal year 2018 will increase by 10-20% year-on-year, and its operating profit margin will be 2-3%. JDI Chief Financial Officer Daichi Oshima said that 'the next fiscal year is expected to increase substantially' The company is looking forward to Apple’s new iPhone to be released this fall. With the view that 'the shipment of LCD models is expected to surpass the organic EL models' (the senior director of IHS Markit, a UK research company), There is a voice saying 'JDI will benefit from this'.
However, the current competition between JDI and Chinese panel makers with increasing technological capabilities is becoming increasingly intensified. From January to March, sales for Chinese mobile terminals accounted for 11% of JDI's total sales, which fell by 18% year-on-year.
The reason for this is the deceleration in demand for the smart phone market in China, and the increasing competition with Chinese panel makers. Due to the 'high profit margin for panels for high-end smart phones in China than for Apple's' (represented by senior analyst Nieken Kangfu of Mizuho Securities), Two factors have a huge impact on JDI.
In addition, trade frictions between China and the United States have also become a risk. The U.S. Department of Commerce has imposed sanctions on ZTE for prohibiting U.S. companies from trading with ZTE for the next seven years. ZTE smartphones have been forced to stop selling. JDI president, East, said that ZTE was The impact of sanctions on JDI sales reached 'a few billion yen'. If the US sanctions were extended to other Chinese manufacturers such as Huawei Technologies, the impact on JDI would further expand.
Get rid of the dependence on smart phones
JDI officially announced on May 15 the personnel adjustment of Vice President Yoshizaki Yoshizaki as president. The former president of the company, Mr. He Xiu, will serve as a technical advisor. In order to achieve the goal of turning the profit and loss of the 2018 fiscal year into profit, the company The new system will be strengthened for car-based business, free from relying on smart phone profit model.
Tsukisaki will be the third president of JDI since its establishment in 2012. The high-level personnel of JDI has been in confusion. After the presidential election announced in March 2017, it was withdrawn again in May, two months later. As the president of the East came in as chairman, and the president of He Xiu II was re-elected.
Tsuyoshi Kawasaki served as the head of JDI's vehicle department as of March, and played a role in negotiating with European auto parts makers. JDI's automotive-ready sales for instruments, etc., exceeded 100 billion yen for the first time in fiscal year 2017. According to the UK survey company IHS Markit statistics, its global share ranks first.
For mobile terminals, the business accounts for 80% of the total sales. JDI's performance has been dominated by smartphones. In order to consolidate its profitability, the company needs to expand its in-vehicle business, which can obtain stable revenue.
In addition, the organic EL business has also become a topic. In order to achieve mass production of organic EL panels, JDI has been exploring capital cooperation with Chinese companies, but the negotiation of relevant conditions has reached an impasse, and the deadline originally set for March 2018 has been postponed. The incoming president reduced the tone, saying that 'the wind on organic EL has changed, and the mass production investment with overseas partners will make judgments based on a careful observation of the market'.
