| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1323.3B | ¥1880.1B | -29.6% |
| Operating Income / Operating Profit | ¥-186.9B | ¥-370.7B | +49.6% |
| Ordinary Income | ¥-304.6B | ¥-404.1B | +24.6% |
| Net Income / Net Profit | ¥-78.1B | ¥-820.2B | +90.5% |
| ROE | 105.3% | -1190.4% | - |
For the fiscal year ended March 2026, Japan Display reported Revenue ¥1,323B (YoY -¥557B, -29.6%), Operating Loss ¥187B (improvement of ¥184B YoY), Ordinary Loss ¥305B (improvement of ¥100B YoY), and Net Loss ¥78B (improvement of ¥742B YoY). Despite a significant revenue decline, the deficit narrowed substantially; however, operating and ordinary stages remain in loss. The compression of Net Loss was largely driven by non-recurring Special Income of ¥233B (including gain on sale of subsidiary shares ¥185B). Gross margin improved to 1.9% (prior year -5.1%), indicating progress in correcting cost of goods sold, but operating margin remained weak at -14.1% (prior year -19.7%), showing core profitability is still fragile. Shareholders' equity stood at -¥74B, indicating continued capital impairment, and with short-term borrowings of ¥650B concentrated in current liabilities, the current ratio of 63.4% signals a warning on short-term liquidity.
Revenue: Revenue was ¥1,323B (YoY -¥557B, -29.6%), a substantial decline. As a single-segment display business, declines in shipments of panels for smartphones, automotive, and industrial equipment together with intensified price competition appear to have driven the revenue drop. Gross margin improved to 1.9% (prior year -5.1%), and Cost of Goods Sold ¥1,298B contracted by -35.4%, outpacing the revenue decline rate (-29.6%), indicating corrections in manufacturing costs and improved production efficiency. The cycle through inventory valuation losses, yield improvements, and fixed-cost reductions likely contributed to gross margin recovery.
Profitability: Gross profit ¥2.6B less SG&A ¥21.3B (prior year ¥27.4B) resulted in Operating Loss ¥18.7B. SG&A rose slightly as a percentage of sales to 16.1% (prior year 14.6%) but fell ¥6.1B in absolute terms (-22.3%), reflecting effects of workforce and site structural reforms. Non-operating items comprised Non-operating Income ¥1.7B in interest/dividends and ¥10.3B in foreign exchange gains (total ¥17B) versus Non-operating Expenses ¥13.5B centered on interest expense ¥8.7B, producing Ordinary Loss ¥30.5B. Interest expense roughly doubled from ¥4.4B prior year, and the increase in financial leverage and interest burden expanded the ordinary-stage loss. Extraordinary items comprised Special Income ¥234B (gain on sale of subsidiary shares ¥185B, etc.) and Special Losses ¥115B (including business restructuring costs ¥94B and impairment losses ¥20B), yielding net special items +¥119B that contributed to Net Loss compression. After deducting income taxes ¥1.3B, Net Loss was ¥78B (prior year -¥820B), showing large improvement due to one-off items. Overall, gross profit and operating loss trends are improving, but interest burden and special losses remain heavy; excluding one-offs, recurring ordinary profitability remains in the red. The company is in a phase of declining revenue with shrinking losses.
Profitability: Operating margin was -14.1% and Net Margin was -5.9%, remaining in loss but significantly improved from prior year (Operating margin -19.7%, Net margin -43.6%). Gross margin 1.9% improved by 7.0pt from prior year -5.1%, indicating progress in manufacturing cost correction. EBIT was ¥-187B; adding Depreciation ¥39B yields EBITDA ¥-148B, and EBITDA margin was -11.2%, so core cash generation remains negative. Reported ROE 105.3% is not meaningful due to negative shareholders' equity. ROA on an ordinary-income basis was -22.4%, and total asset turnover was 1.065x.
Cash Quality: Operating Cash Flow (OCF) was ¥-232B versus Net Loss ¥-78B, so OCF lagged Net Income, though inventory reduction +¥173B and increase in advance receipts +¥51B contributed to working capital improvement. OCF subtotal (before working capital changes) was ¥-28B, indicating weak cash generation from operations.
Investment Efficiency: ROIC was -62.7%, indicating deep negative returns on invested capital.
Financial Health: Equity Ratio was -6.0%, indicating capital impairment. Current Ratio 63.4% and Quick Ratio 57.7% signal short-term payment capacity concerns. Cash and deposits ¥278B versus short-term borrowings ¥650B yields a cash/short-term-debt ratio of 0.43x, indicating insufficient on-hand liquidity. DE ratio cannot be calculated due to negative shareholders' equity. Interest coverage (EBIT / interest expense) was -2.14x, showing interest burden is pressuring earnings.
Operating Cash Flow was ¥-232B, ¥-154B worse than Net Loss ¥-78B. Primary factors were operating cash flow before working capital changes of ¥-28B (indicating weak core cash generation), payments of restructuring costs ¥94B, retirement-related payouts ¥64B (including additional retirement payments), and interest payments ¥84B—non-recurring and financial outflows compounded the shortfall. On working capital, inventory decrease +¥173B, collection of trade receivables +¥61B, and increase in advance receipts +¥51B provided inflows, while decrease in trade payables -¥87B and decrease in other payables -¥26B were outflows, resulting in net working capital improvement that supported OCF. Investing Cash Flow was +¥228B, driven mainly by proceeds from sale of subsidiary shares ¥200B; including regular capital expenditures -¥12B, asset disposals produced large inflows. Financing Cash Flow was +¥51B, centered on net increase in short-term borrowings ¥55B. Free Cash Flow was ¥-4B (OCF ¥-232B + Investing CF ¥+228B), nearly balanced, but dependent on asset sales, so sustainable cash generation remains under recovery.
This period's operating-stage loss was ¥-305B, but Special Income ¥234B (including gain on sale of subsidiary shares ¥185B) and Special Losses ¥115B (including business restructuring costs ¥94B and impairment ¥20B) compressed Net Loss to ¥-78B. The ¥227B gap between ordinary loss and net loss is mostly attributable to one-off items, with low repeatability. Non-operating income ¥17B is small at 1.3% of sales, including foreign exchange gains ¥10B, with uncertain sustainability. Non-operating expenses ¥135B are high at 10.2% of sales, centered on interest expense ¥87B, indicating high dependence on financial costs. Although OCF lagged Net Income, working capital measures such as inventory compression and increase in advance receipts occurred, and accruals are influenced by temporary improvement factors. Comprehensive income was ¥-142B, ¥64B worse than Net Loss ¥-78B, with positive contributions from translation adjustments +¥27B and retirement benefit adjustments +¥30B, but substantive capital impairment continues. Overall, earnings quality remains low due to weak recurring profitability and dependence on one-off gains.
Common stock dividend was ¥0 per annum (interim ¥0, year-end ¥0), maintaining no dividend. Given Net Loss ¥78B, Free Cash Flow ¥-4B, and shareholders' equity ¥-74B, room to resume dividends is limited. Payout Ratio is 0%, and recovery of shareholders' equity and stable cash generation are prerequisites.
Liquidity Risk: Current Ratio 63.4% and Cash ¥278B versus Short-term Borrowings ¥650B give a cash/short-term-debt ratio of 0.43x, indicating insufficient on-hand liquidity. With Shareholders' Equity -¥74B and capital impairment, refinancing risk and the need for additional funding are high. Working capital improvements from inventory compression and increased advance receipts are dependent on one-off factors, and liquidity pressure will continue until sustainable cash generation is established.
Profitability Risk: Operating margin -14.1% and EBITDA ¥-148B indicate core profitability remains negative. Although Gross Margin 1.9% improved, vulnerability to intensified price competition in the panel market and demand fluctuations is high; if product mix or yield improvements do not proceed as planned, the deficit could widen again. Interest expense ¥87B is a heavy burden, and Interest Coverage -2.14x indicates lack of ability to cover interest from earnings.
One-off Income Dependence Risk: The compression of Net Loss this period heavily depended on Special Income ¥234B (gain on sale of subsidiary shares ¥185B, etc.). If these one-off gains do not recur in subsequent periods, Net Income could revert to a large deficit. Investing CF inflow from asset sales +¥228B is also of low repeatability, and establishing a sustainable funding base is a challenge.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | -14.1% | 7.8% (4.6%–12.3%) | -21.9pt |
| Net Margin | -5.9% | 5.2% (2.3%–8.2%) | -11.1pt |
Profitability is well below industry median, with both operating and net margins in negative territory and ranking in the lower end within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -29.6% | 3.7% (-0.4%–9.3%) | -33.3pt |
Revenue growth is 33.3pt below the industry median, representing a substantial revenue decline and placing the company at the lowest level in growth comparisons within the industry.
※ Source: Company compilation
Improvement in gross margin and operating loss trends is creditable, but core cash generation remains negative with EBITDA ¥-148B; the focus is on stabilizing structural reform effects and improving profitability via better product mix. SG&A has been substantially cut in absolute terms, and fixed-cost structure improvement is progressing.
Short-term funding fragility and increasing interest burden are the key watch items. With Current Ratio 63.4%, cash/short-term-debt 0.43x, and short-term borrowings ¥650B concentrated on maturities, the success of refinancing and progress on capital strengthening measures (equity issuance, subordinated loans, preferred shares, etc.) are important monitoring points. To reduce interest expense ¥87B, debt maturity extension or improved interest terms are necessary.
The narrowing of Net Loss this period depends heavily on Special Income ¥234B (gain on sale of subsidiary shares ¥185B, etc.), and repeatability is low in subsequent periods. Investing CF inflow from asset sales is also temporary, so establishing a sustainable revenue base and cash generation capability is key to medium-term assessment. While inventory compression and working capital optimization have progressed, OCF subtotal ¥-28B indicates core cash generation remains weak, and improving capital efficiency toward positive ROIC from -62.7% is a major challenge.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.