Japan Display announced another quarterly loss, casting doubt over its proposed bailout deal with a Chinese-Taiwanese group.
The supplier for Apple also announced structural reforms, which include the slashing of about 1,000 though an early voluntary retire plan by the end of the second quarter of FY 2019, along with cuts in executive compensations and bonuses to managers.
JDI warned it cannot guarantee a return to profit this year as demand for smartphone screens stays weak. The company continues to bear the brunt of its late shift to organic light-emitting diode screens and disappointing sales of the iPhone XR, the only model with a liquid crystal display (LCD) screen.
In the small to medium display industry where JDI operates, the competitive environment in the smartphone market is becoming increasingly severe due to the increasing adoption of OLED displays and the increased production capacity of Chinese display manufacturers. In addition, JDI's business has been performing weakly, partly due to the slowdown in the Chinese economy and the slump in the smartphone market, which can be considered to be caused by the prolonged life cycle of smartphones.
Japan Display’s net loss for the three months ended March was 98.6 billion yen, versus a 147 billion yen loss a year earlier, its ninth consecutive quarterly loss.
Japan Display’s results will be closely watched by its Chinese-Taiwanese suitors, who delayed an up to 80 billion yen investment this week to reassess the company’s prospects.
However, according to Japan Display CFO Takanobu Oshima, the screen maker is making steady progress in discussions with the buyer group.
The bailout deal would allow the buyers - including Taiwanese flat screen maker TPK Holding Co Ltd and Chinese investment firm Harvest Group - to become Japan Display’s biggest shareholders with a 49.8 percent stake, replacing the Japanese government-backed INCJ fund.
Japan Display was formed in 2012 by combining the LCD businesses of Hitachi Ltd, Toshiba Corp and Sony Corp in a deal brokered by the government.
Japan Display recorded a 75.2 billion yen writedown in the quarter ended March on an LCD plant launched two years ago.