Jiji PressTOKYO (Jiji Press) — Japan Display Inc. said Wednesday that it will shed some 3,700 jobs, mostly overseas employees, as part of its business reconstruction efforts.
The struggling major Japanese manufacturer of small and medium-sized liquid crystal display panels also said it will streamline its production bases at home and abroad.
Specifically, the company plans to halt production at its plant in Nomi, Ishikawa Prefecture, in December.
Japan Display will book a special loss of about ¥170 billion in fiscal 2017 for structural reform costs.
Although it did not unveil forecasts for its business results for the year to March next year, the company looks certain to suffer a net loss in the year, sources familiar with the situation said. Japan Display has been in the red since the year that ended in March 2015.
Japan Display’s three main banks — Mizuho Bank, Sumitomo Mitsui Banking Corp. and Sumitomo Mitsui Trust Bank — set up a credit line of ¥107 billion to support the company.
Japan Display plans to cut some 3,500 jobs abroad. It will launch a voluntary redundancy program to shed 240 jobs in Japan.
The company mainly manufactures LCD panels for smartphones and other mobile terminals, cameras and in-vehicle equipment. On the production base realignment, it is considering the possibility of its organic light-emitting diode display subsidiary JOLED Inc. utilizing the Nomi plant.
In order to clarify management responsibility, executive pay will be cut by 20 percent for Chairman Nobuhiro Higashiiriki and President Shuji Aruga between August and March next year.
“This will be the last chance for the company’s structural reforms,” Higashiiriki told a press conference.
He suggested that his company is considering receiving a capital injection from abroad to procure funds for investment in OLED display production, a key business area where the company is lagging behind rival display makers.
Innovation Network Corp. of Japan, a government-backed business turnaround fund and a major shareholder in Japan Display, said in a statement that it will help the company to complete its structural reforms.
INCJ also said it will support the company’s financing through a debt guarantee.
With major smartphone makers, including Apple Inc., switching to OLED displays from LCD panels, Japan Display is expected to suffer a drop of some 15 to 20 percent in its sales in fiscal 2017.
The company aims to log an operating profit of ¥40 billion in fiscal 2019 and achieve an operating profit margin of 5 percent by reducing its annual fixed costs by ¥50 billion through structural reforms.
For April-June this year, Japan Display said it suffered a net loss of ¥31,456 million, against the year-before loss of ¥11,772 million.