Japan Display Inc. · TSE:6740
Japan Display — Q2 FY2016 Earnings Presentation
26 slides from Japan Display's earnings presentation, Nov 9, 2016
Slide 1: Second Quarter of FY 2016 Consolidated Financial Results
Second Quarter of FY 2016 Consolidated Financial Results Japan Display Inc. November 9, 2016
Slide 2: Agenda
Agenda 1. 2Q16 Financial Results & 3Q16 Guidance 2. Technology Strategy 3. Growth Strategy (Structural Reforms) Note: The depreciation costs noted in this document include amortization of goodwill and non-operating depreciation. The R&D costs noted in this document are the total of the amounts inclu
Slide 3: 2Q16 Financial Results & 3Q16 Guidance
2Q16 Financial Results & 3Q16 Guidance Keiichi Yoshida Chief Financial Officer Copyright © 2016 Japan Display Inc. All Rights Reserved. 3
Slide 4: 2Q-FY16 Topics
2Q-FY16 Topics Due mainly to lower demand from some customers, shipments carried over to the next quarter and stronger yen 2Q sales fell short of Aug 9 announcement, but cost improvements etc. brought op. income near forecast. 20 yen YoY appreciation against a dollar likely to have reduced sales
Slide 5: 2Q-FY2016 Financial Results
2Q-FY2016 Financial Results (Billion yen) Q2-FY16 Q2-FY15 YoYChg. Q1-FY16 QoQ Chg. Net sales 196.6 261.7 (65.1) －24.9% 174.3 +22.3 ＋12.8% Cost of sales 183.5 237.1 (53.6) 165.9 +17.6 Gross profit 13.1 24.6 (11.5) －46.9% 8.4 +4.7 ＋55.8% 6.7% 9.4% 4.8% SG&A 11.9 16.3 (4.4) 11.8 +0.1 Operating income (
Slide 6: 1H-FY2016 Consolidated Operating Results
1H-FY2016 Consolidated Operating Results (Billion yen) 6 mo. ended ６ mo. ended YoY Chg. Mar.31, 2016 Mar.31, 2015 Net sales 371.0 507.9 (136.9) －27.0% Cost of sales 349.5 465.4 (115.9) Gross profit 21.5 42.5 (21.0) －49.4% 5.8% 8.4% SG&A 23.7 31.9 (8.3) Operating income (loss) (2.2) 10.6 (12.8) - -0.
Slide 7: Operating Profit Change Factors
Operating Profit Change Factors vs. August 9 forecast vs. Previous quarter （Billion Yen） （Billion Yen） Fixed costs Variable costs -0.9 Shipment +1.8 -2.0 Selling prices +1.9 & product mix Volume FX Fixed -0.5 costs -1.4 Variable 1.2 1.0 costs 1Q16 FX 1.2 actual +6.4 2Q16 +1.6 2Q16 2Q16 forecast -1.9
Slide 8: Balance Sheet
Balance Sheet (Billion yen) 9/2016 3/2016 Cash and deposits 72.7 55.1 Accounts receivable 81.3 80.7 Other receivables 103.0 57.1 Inventories 109.2 114.1 Others 26.6 15.8 Total current assets 392.9 322.8 Non-current assets 516.8 491.0 Total assets 909.7 813.9 Accounts payable 226.7 138.1 Interest-bea
Slide 9: Cash Flows
Cash Flows (Billion yen) Increase/ Q1-FY16 Q2-FY16 1H-FY16 1H-FY15 Decrease Income before income taxes (15.8) (6.3) (22.2) 1.7 (23.9) Depreciation and amortization 20.0 21.5 41.5 40.5 1.0 Working capital (1) (26.4) 61.7 35.3 (52.9) 88.2 Advance receipts 60.0 (1.0) 59.0 17.8 41.2 Other (4.7) (2.9) (7
Slide 10: 3Q-FY16 Guidance
3Q-FY16 Guidance • Sales forecast to rise 35% QoQ to Y265bn on seasonal factors & recovery of China market share. • Operating income of Y10bn owing to higher sales. 3Q-FY16 Forecast • Utilization rate high at every fab, same expected in 4Q. • Appreciation of Y16.5 YoY likely to lower op. income by a
Slide 11: Technology Strategy
Technology Strategy Shuji Aruga President & Chief Operating Officer Copyright © 2016 Japan Display Inc. All Rights Reserved. 11
Slide 12: Quarterly Sales by Product Category and Region
Quarterly Sales by Product Category and Region (Billon Yen) 4Q16 sales 300 forecast 250 200 US/EUR Mobile 150 100 China 50 Other region Automotive, Non-mobile 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16F (FY) 2Q16 sales: Lower demand from some customers in China, US/EUR sales short of forecast 3Q16: US
Slide 13: 3Q16 and 4Q16 Forecast
3Q16 and 4Q16 Forecast Expect 3Q total sales to greatly exceed 2Q. Recovering share of China smartphone makers. 4Q sales: Lower vs. 3Q due to US/EUR seasonal factors but forecast higher sales YoY on recovery in China smartphone display business. Automotive sales to rise thru 2H. Anticipate con
Slide 14: Platform Technology That Supports Growth
Platform Technology That Supports Growth With platform core technology as base => expand applications& business Aviation/ Smartphone 2in1 PC Medical Signage Book/ Envisioned Automotive VR/AR Gaming PC Education applications “FULL ACTIVE” 4-side bezel free/ Non-rectangular Platform technology Low-p
Slide 15: "FULL ACTIVE" Technology Road Map
“FULL ACTIVE” Technology Road Map 2017 2018 2019 Phase1 4-side bezel free, Non-rectangular shape Co-development with multiple firms in Phase2 LCD supply chain Low power consump, Thin formfactor Phase3 Flexible Copyright © 2016 Japan Display Inc. All Rights Reserved. 15
Slide 16: Flexible OLED vs "FULL ACTIVE"
Flexible OLED vs “FULL ACTIVE” OLED FULL ACTIVE（LCD） Flexible Phase3 (Flexible) Resolution Fair (=<400ppi) Excellent (=<800ppi) Power consumption Good Excellent Thinness Excellent Excellent Designability Border Fair / Excellent Good / Excellent (Top, left, right / bottom) Bendable Excellent Excellen
Slide 17: Growth Strategy (Business Structural Reforms)
Growth Strategy (Business Structural Reforms) Mitsuru Homma Chairman and Chief Executive Officer Copyright © 2016 Japan Display Inc. All Rights Reserved. 17
Slide 18: Medium-Term Business Scenario: Structural Reforms
Medium-Term Business Scenario : Structural Reforms Change business portfolio; Non-mobile 33% of portfolio by 2018, 50% by 2021 (mfg ratio) ・ With CMOS (LTPS/Advanced-LTPS) as core technology shift to high value-added displays OLED R&D to continue going forward, will build structure geared to cus
Slide 19: Current Display Revolution = Growth Industry
Current Display Revolution = Growth Industry Growth 1. Expanded display application areas opportunities 2. Evolution of interactive devices Faster comm. • Cooperation with different types of infrastructure businesses to drive open innovation More IoT/AI • Fusion of software/hardware (5G/6G) • System
Slide 20: Platform Technology That Supports Growth
Platform Technology That Supports Growth (same slide as P14) With platform core technology as base => expand applications & business Aviation/ Smartphone 2in1 PC Medical Signage Book/ Envisioned Automotive VR/AR Gaming PC Education applications “FULL ACTIVE” 4-side bezel free/ Non-rectangular Plat
Slide 21: JDI's Target Segments
JDI’s Target Segments Key areas: FHD smartphones (FULL ACTIVE), automotive (designability), VR/AR (ultra fast response & high-res), light & thin/2in1 note PCs (low- power consumption/Pixel Eyes™), signage (reflective) *()= Technology advantage of each application 1000 VR Fast response 800 AR High-
Slide 22: Strategic Alliance with E Ink Holdings Inc.
Strategic Alliance with E Ink® Holdings Inc. × Electronic paper JDI's LCD-nurtured LTPS displays using E Ink's "backplane technology", "electrophoretic ink in-cell touch etc. technology" Strategic alliance with E Ink is a business structural reform for creating a variety of non-mobile new markets in
Slide 23: JDI & E Ink Strategic Alliance Offers Synergies
JDI & E Ink Strategic Alliance Offers Synergies Strategic alliance with E Ink to add to line-up of electronic paper displays & strengthen line-up of reflective displays LCD (Reflective MIP) Color filter LCD TFT backplane E Ink (EPD) E-Ink TFT backplane OLED Sealants Organic EL TFT backplane Copyrigh
Slide 24: Progress of Structural Reforms
Progress of Structural Reforms Structural Reforms (Announced March 2016) 1. Back-end production: MOZ* share transfer/Taiwan business reorg. *Morningstar Optronics Zhuhai ■ Goal Lower fixed costs by reorganizing back-end mfg ops Reorganize Taiwan operations ■ Progress Sale TDI Transfer of all shares
Slide 25: Progress of Structural Reforms
Progress of Structural Reforms 2. Front-end production ・ Structural reform: Completed retirement Higashiura of Fab 1 Plant ・ Fab 2: Currently at full operating capacity Front-end mfg. Mobara Plant, ・ Closure impending, so building inventory V3 line ・ Glass input ending in Dec. 3. Labor cost reductio
Slide 26: Forward Looking Statement
Forward Looking Statement: Any information related to market trends or industries mentioned in this document is based on information available at present and JDI does not guarantee that this information is accurate or complete. Any plan, estimation, calculation, quotation, evaluation, prediction, ex