Reducing fixed costs and improving capital efficiency

「Shinko ElectricとJDIは先月30日、茂原工場の売買契約を締結したと発表した。」

「As part of its structural reforms, the company decided to end production at the Mobara Plant in Mobara, Chiba Prefecture, which had a heavy fixed-cost burden, by November 2025 and consolidate domestic production at the Ishikawa Plant in Nomi District, Ishikawa Prefecture. In addition, personnel reductions in Japan and overseas through measures including an early retirement program are under way. In Japan, 1,483 people had applied by the end of the application period on 25 August 2025, and 1,319 people left the company during the current fiscal year, supporting the transition to an organizational structure aligned with the scale of the business.」

「To improve profitability, the company decided to end production at the fixed-cost-intensive Mobara plant by the end of 2025 and is proceeding according to plan with customer coordination and building up product inventory, among other measures. It also sought to establish a management structure suited to the scale of its business, recruiting applicants for voluntary retirement in Japan in June 2025. By the end of the application period in August of the same year, 1,483 people had applied.」

「The company is pursuing and considering various management initiatives, including ending production at the Mobara Plant by March 2026, consolidating domestic production at the Ishikawa Plant, and making the automotive business a subsidiary.」

「In addition to reducing manufacturing fixed costs by reducing LCD panel production capacity at the Mobara Plant, the Company proceeded with withdrawing from unprofitable businesses and products」

「The company reduced manufacturing fixed costs by suspending production at the former Higashiura Plant in March 2023 and reducing LCD panel production capacity at the Mobara Plant. The transfer of the building at the former Higashiura Plant, where production ended in March 2023, was completed on 1 April 2024.」

「The group is working on further cost reductions through company-wide business structure reforms, including improving the utilization efficiency of facilities, increasing productivity by optimizing the scale of its assets, and reviewing its supply chain.」

「Fixed-cost reductions resulting from the shutdown of the Higashiura Plant and the reduction of smartphone liquid crystal display production capacity at the Mobara Plant progressed more than expected.」

「As part of this strategic initiative, in March 2023 the company entered into an agreement with Sony Semiconductor Manufacturing Corporation for the sale of the buildings at its Higashiura Plant, where production ended at the end of that month. The property handover date is 1 April 2024.」

「As part of the shift to an asset-light model, the company resolved in May 2022 to cease production at the Higashiura Plant, which was inferior to large glass-substrate plants in productivity and cost competitiveness, and completed this in March 2023. In October 2022, it also resolved to transfer all shares in its consolidated manufacturing subsidiary SE in China and completed the share transfer procedures in December of that year.」

「In October 2022, the Company also resolved to transfer all shares of its Chinese manufacturing subsidiary Suzhou JDI Electronics Inc. (hereinafter, "SE") and completed the share transfer procedures in December of the same year.」

「In this challenging environment, the company is working to strengthen competitiveness and improve profitability by moving to an asset-light model and converting fixed costs into variable costs. As part of these efforts, on 28 October 2022, the company resolved to sell all shares of its Chinese manufacturing subsidiary, Suzhou JDI Electronics Inc., and entered into a share transfer agreement with the buyer on the same day.」

「As part of company-wide business structure reforms, the Group is working to further reduce costs by improving equipment utilization, raising productivity through right-sizing its asset base, and reviewing its supply chain.」

「As part of its strategic initiatives during the fiscal year, the company transferred all shares of its consolidated manufacturing subsidiary KOE effective 1 December 2021.」

「JDIT entered into a share transfer agreement with JDIT and Wise Cap Limited Company on the same date to transfer all shares of KOE, the company's consolidated manufacturing subsidiary held by JDIT, for ¥8,582 million to Wise Cap Limited Company, a wholly owned subsidiary of Wistron Corporation, the company's manufacturing contractor. The share transfer was completed on 1 December 2021.」

「To improve competitiveness and grow the business, the company aims to right-size its assets, strengthen cost competitiveness, and diversify its supply chain.」

「To address this situation, our group will continue working to optimize management resources, including transforming its overall business structure, improve equipment utilization, optimize the scale of assets through productivity improvements, and achieve further cost reductions by reviewing the supply chain.」

「As part of its fixed-cost reduction measures, the company completed the transfer of the Hakusan Plant in Hakusan, Ishikawa, which had been shut down since July 2019, on 1 October 2020. This is expected to reduce costs by approximately ¥8 billion annually going forward.」

「Although sales declined, manufacturing fixed costs, personnel expenses and other fixed costs were reduced through the structural reforms implemented since the first half of the previous fiscal year, and various expense-reduction measures were effective. As a result, gross profit improved by ¥21,319 million year on year and turned positive, while the operating loss improved by ¥25,290 million to ¥9,879 million.」

「To resolve this situation, the company will continue to seek to stabilize a sustainably profitable structure through ongoing structural reforms to reduce fixed costs and improve its product portfolio during the current consolidated fiscal year, while also continuing to implement measures to strengthen its finances and improve its business.」

「During the consolidated fiscal year, the Company strengthened cost competitiveness by reducing fixed costs through structural reforms and continually reviewing and improving variable costs. For the fiscal year ending March 2021, it planned to consider further improvements to its cost structure through variable-cost reductions arising from supply-chain diversification and productivity and quality improvements, as well as further asset optimization.」

「In addition to further reducing fixed costs through the transfer of production equipment and other assets at the Hakusan Plant announced on 31 March 2020, the company plans to implement measures to stabilize a return to profitability by improving its product portfolio through capital investment targeting growth markets and the commercialization of high-value-added products based on LTPS and Advanced-LTPS as common technology platforms.」

「During the cumulative period, as part of business-structure reform aimed at further reducing fixed costs, we downsized the mobile business, for which no substantial recovery in demand was expected, temporarily suspended operations at the Hakusan Plant (Ishikawa site, Hakusan, Ishikawa Prefecture) from July 2019, and closed the back-end process line at the Mobara Plant (V2 line, Mobara, Chiba Prefecture).」

「Impairment loss on property, plant and equipment (Note) ¥51,372 million」

「Although fixed costs were reduced through structural reforms and other measures implemented last year, the operating loss was ¥30,989 million, compared with an operating loss of ¥61,749 million in the previous consolidated fiscal year, due to lower gross profit resulting from declining sales and intensified competition, as well as the recognition of impairment losses and other factors.」

「Although operating profit remained a loss because of the year-on-year decline in sales, the loss improved year on year owing in part to the results of the structural reforms implemented in the previous consolidated fiscal year, to ¥10,626 million, compared with an operating loss of ¥38,897 million in the same cumulative period of the previous year. However, the Group did not return to profitability.」

「Although the scale of sales resulted in an operating loss, the loss improved year on year owing in part to the results of the structural reforms implemented in the previous consolidated fiscal year, to ¥14,475 million, compared with an operating loss of ¥26,806 million in the same cumulative period of the previous year.」

「Although operating profit turned into an operating loss because of lower sales, the loss improved both year on year and quarter on quarter, to ¥9,806 million, owing in part to the results of the structural reforms implemented in the previous consolidated fiscal year. The operating loss was ¥14,442 million in the same quarter of the previous year and ¥22,851 million in the previous quarter.」

「Specifically, the company closed the Nomi plant's manufacturing line for the front-end process, namely LCD cell production, consolidated and integrated overseas subsidiaries manufacturing the back-end process, namely display module assembly, recorded impairment losses on operating and idle assets, integrated the Ishikawa plant's OLED pilot line with the Mobara plant's OLED pilot line, and reduced headcount. It also wrote down inventories to improve its financial position.」

「Under this medium-term management plan, the company has decided to implement and is undertaking sweeping structural reforms, including closing production lines, recognizing impairment losses on operating and idle assets, reducing headcount, and restructuring overseas manufacturing subsidiaries, in order to significantly reduce fixed costs.」

「The Company expects to record approximately ¥170 billion in business-structure improvement costs as an extraordinary loss in the current consolidated fiscal year in connection with the business-structure reforms currently being implemented. Through these reforms, company-wide efforts to reduce variable costs and the development of higher-value-added products, the Company seeks to break away from its historically high-cost structure.」

「The total number of employees expected to be reduced as a result of these measures is approximately 3,700 across the group.」

「The company carried out structural reforms centered on the partial closure of domestic front-end LCD panel production lines, efforts to rationalize back-end assembly production in China, and the introduction of an early-retirement support program. These measures reduced less competitive assets and fixed costs, resulting in an improvement in operating profit.」

「The net loss attributable to owners of the parent was ¥11,772 million, following the recognition of ¥1,620 million in early-retirement premium payments as an extraordinary loss, as well as tax expenses and profit attributable to non-controlling interests.」

「As the second phase, the company will reduce fixed costs and improve resource efficiency through structural reforms, thereby strengthening product cost competitiveness and improving profitability amid intensifying competition.」