Fourth Quarter & Full Year Fiscal 2016...Japan Display Inc. May 10, 2017 Financial Results Fourth Quarter & Full Year Fiscal 2016

Japan Display Inc.May 10, 2017

Financial ResultsFourth Quarter & Full Year

Fiscal 2016

2Copyright © 2017 Japan Display Inc. All Rights Reserved.

Note about terms in this presentation:・ Depreciation costs include amortization of goodwill and non-operating depreciation・ Research and development costs are the total of R&D costs included in COGS and R&D costs in SG&A.

Fourth Quarter & Full Year Fiscal 2016 Results

Fiscal 2017 Key Policies


Fourth Quarter & Full Year Fiscal 2016 Results

Keiichi YoshidaChief Financial Officer


4Q-FY2016 Topics 4Q sales above Feb. 8 forecast. But op. income finished below due

to higher mfg costs caused by delays in yield improvements. Higher fixed costs etc YoY due to Hakusan fab start-up, but higher

sales mainly on recovery of China mkt share improved op. income. Recorded non-operating forex loss of Y3.6bn. Full term: Sales lower YoY due to strong yen etc., but op. income

improved on mgmt reforms. Reversal of Y20.9bn in deferred tax assets left a net loss nearly unchanged YoY.

(Billion Yen)Net

salesOperating

incomeOrdinaryincome

Netincome

Dep. &Amort.

R&Dexpense

FX rate(\/US$)

4Q-FY16 (A) 240.2 8.0 0.2 (22.3) 25.3 4.7 113.64Q-FY16 (F) 230.0 12.5 - - 26.9 8.2 110.04Q-FY15 (A) 176.3 (7.2) (22.8) (36.3) 20.1 6.7 115.4

FY16 (A) 884.4 18.5 (8.9) (31.7) 90.2 14.7 108.4FY15 (A) 989.1 16.7 (12.9) (31.8) 80.9 23.3 120.1


Forex Losses & Reversal of Deferred Tax Assets

Forex loss• Forex losses: Y3.6bn in 4Q; Y11.2bn full term.• About 70% due to repayment of debt recorded at time of an

extremely strong yen. Remaining 30% due to substantial forex volatility, esp in 1H.

• Repayment of long-term borrowings finished in FY2016; no more related forex losses from FY2017 onward.

Reversal of deferred tax assets• Given rising use of OLED in smartphone mkt more biz/cost

structure reforms aligned with mkt changes needed; planning measures that incl. structural reforms

• Based on these measures & a medium-term financial plan under review, carefully examined recoverability of deferred tax assets => in 4Q reversed Y20.9bn of the end-3Q balance of these assets & booked as corporate tax adjustment.


4Q-FY2016 Operating Results(Billion yen)

Q4-FY16 Q4-FY15 Q3-FY16Net sales 240.2 176.3 +63.9 ＋36.3% 273.2 (33.0) －12.1%

Cost of sales 220.0 168.1 +51.9 246.5 (26.5)Gross profit 20.2 8.2 +12.0 ＋146.8% 26.7 (6.5) －24.1%

8.4% 4.7% 9.8%

SG&A 12.2 15.4 (3.2) 14.0 (1.8)Operating income 8.0 (7.2) +15.2 - 12.7 (4.7) －36.6%

3.3% -4.1% 4.6%

Net non-operating loss (7.8) (15.6) +7.8 (1.1) (6.7)Ordinary income (loss) 0.2 (22.8) +23.0 - 11.5 (11.3) －98.4%

0.1% -12.9% 4.2%Net extraordinary income (loss) (0.7) (13.9) +13.2 0.0 (0.7)Income (loss) before tax (0.6) (36.8) +36.2 - 11.5 (12.1) -

-0.2% -20.9% 4.2%Income taxes 21.9 (0.6) +22.5 - 3.6 +18.3 ＋502.7%

Income (loss) attributable toowners of parent (22.3) (36.3) +14.0 - 7.3 (29.6) -

-9.3% -20.6% 2.7%

EBITDA 31.7 9.9 +21.8 ＋222.0% 33.8 (2.1) －6.2%13.2% 5.6% 12.4%

Avg. FX rate (JPY/USD) 113.6 115.4 109.4Q-End FX rate (JPY/USD) 112.2 112.7 116.5

QoQ Chg.YoYChg.


FY 2016 Operating Results

FY 2015Net sales 884.4 989.1 (104.7) －10.6%

Cost of sales 816.0 912.3 (96.2)Gross profit 68.4 76.8 (8.4) －11.0%

7.7% 7.8%

SG&A 49.9 60.1 (10.2)Operating income 18.5 16.7 +1.8 ＋10.7%

2.1% 1.7%

Net non-operating loss (27.4) (29.6) +2.3Ordinary income (loss) (8.9) (12.9) +4.1 -

-1.0% -1.3%Net extraordinary loss (2.4) (15.0) +12.7Income (loss) before tax (11.2) (28.0) +16.7 -

-1.3% -2.8%Income taxes 19.6 3.4 +16.2 ＋477.8%

Income (loss) attributable toowners of parent (31.7) (31.8) +0.2 -

-3.6% -3.2%

EBITDA 100.8 93.7 +7.2 ＋7.7%11.4% 9.5%

Avg. FX rate (JPY/USD) 108.36 120.1

FY 2016(Billion yen)

YoY Chg.


12.5

8.0

-1.7

-6.０

2.4

1.1 -0.3

（Billion yen）Shipments &Product mix

Fixedcost

Variablecost

FX Others

4Q-FY16 Operating Income Change Factors

4Q16forecast

4Q16result

vs. Feb 8 forecast

12.7

8.0

-4.2

-2.6

-2.6 1.6

3.1

（Billion yen）Shipments &Product mix

Fixedcost

Variablecost

FX

Others

4Q16result

3Q16result

vs. 3Q16 (Prev. quarter)


Balance Sheet(Billion yen)

3/2017 12/2016 3/2016　 Cash and deposits 82.2 82.2 55.1 Accounts receivable 128.6 129.8 80.7 Other receivables 92.0 112.0 57.1 Inventories 100.9 110.2 114.1 Others 14.4 19.9 15.8Total current assets 418.2 454.2 322.8Non-current assets 497.5 531.1 491.0Total assets 915.6 985.3 813.9 Accounts payable 201.0 273.9 138.1 Interest-bearing debt 135.2 93.4 77.3 Advance receipts 179.4 184.4 131.9 Other liabilities 72.9 79.4 101.3Total liabilities 588.5 631.1 448.6Total net assets 327.1 354.2 365.2Shareholders' equity ratio 35.5% 35.7% 44.6%Net debt 53.0 11.2 22.2

Merchandise and finished goods 12 14 28Work in process 19 16 21Raw materials and supplies 6 7 10

Days in inventory 38 36 58


Cash Flow

(1) Working capital = Accounts receivable + Inventories + Accounts payable + Other receivables(2) Free cash flow = Cash flow from operating activities + Cash flow from investing activities

(Billion yen)

Q4-FY16 FY2016 FY2015

Income before income taxes (10.7) (0.6) (11.2) (28.0) Depreciation and amortization 65.0 25.3 90.2 80.8 Working capital (1) 33.8 (47.5) (13.6) (6.4) Advance receipts 52.5 (5.0) 47.5 66.7 Other (2.6) 1.8 (0.9) 38.3Cash flow from operating activities 138.0 (26.0) 112.0 151.4

Acquisitions of property and equipment (116.6) (16.9) (133.4) (186.4) Other (11.3) 2.2 (9.2) 5.2Cash flow from investing activities (127.9) (14.7) (142.6) (181.2)

Cash flow from financing activities 14.0 41.7 55.7 (6.1)

Ending balance, cash and equivalents 82.2 82.2 82.2 55.1Free cash flow (2) 10.1 (40.7) (30.6) (29.7)

1-3Q FY16(9 mo)


1Q-FY2017 Outlook

• Due to seasonality & customer inventory adjustments to accommodate new model launches, we expect sales of Y180bn (large QoQ drop).

• Operating loss expected to be Y15bn due to low level of sales & higher fixed costs mainly for Hakusan & OLED R&D.

1Q-FY17guidance

For 1Q-FY17 a 1 yen change against the US dollar (after hedging) equates to Y400 million in operating income for one quarter (yen depreciation = a gain)

(Billion Yen)Net

salesOperating

incomeOrdinaryincome

Netincome

Dep. &Amort.

R&Dexpense

FX rate(\/US$)

1Q-FY17 (F) 180.0 (15.0) - - 25.4 7.1 110.04Q-FY16 (A) 240.2 8.0 0.2 (22.3) 25.3 4.7 113.61Q-FY16 (A) 174.3 (3.4) (14.2) (11.8) 20.0 3.4 108.0


Fiscal 2017 Key Policies

Shuji ArugaPresident & Chief Operating Officer


Quarterly Sales by Product & Customer Region

0

50

100

150

200

250

300

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17F

（yen bn）

US/Europe

ChinaOther

Auto・Non-mobile

Mobile

(FY)

4Q16: Sales drop in US/Eur due to seasonality but cont'd growth in China1Q17: Expect lower QoQ sales due to seasonality & customer inventory

adjustments for new model launches; also Chinese customers have cautious production plans, apparently wanting to wait for clear sales trends for a global brand smartphone with OLED panels.

2Q17: Active sales of FULL ACTIVE™ as of 3Q. 2Q an in-between period due to product changeovers at Chinese customers, so expect weaker sales in China.


FY 2017 Key Policies

Accelerate OLED development

Expand non-mobile business

Lower B/E point by reducing fixed costs



Accelerate OLED development


Flexible OLED Sample

Panel spec. 5.5 inch FHD(1080x1920)

Resolution 401ppi (Real)

Peak luminance ＞700cd/m2(@10% area)

Contrast ratio >100,000

Color space ＞110%@DCI

Back-plane

Process Advanced-LTPS

Pilot line Ishikawa G4.5

Front-plane

Process SBS-OLED

Pilot line Ishikawa G4.5


Development of Flexible OLED

Side-by-side (SBS) 5.5-inch real FHD (401ppi) Advanced-LTPS flexible OLED, now preparing for production on Mobara G6 pilot line.

Equipment installation underway on Mobara OLED pilot line designed for mass mfg. Pilot production planned for this summer.

FY18-1H: Planned start of mass mfg.


High-res OLED Production： Advanced-SBS

Frame

Mask

Frame

Mask

Scan

Mask

TFT substrate

Deposition source

Scan

TFTSubstrate

Mask

Deposition source

SBS technology（existing）

［Compet-itors］

Advanced-SBS

technology

Mask PixelEvaporation method

RGB Real (e.g. Stripe)

R + G + B＝3 sub / 1 pixel

R or B + G＝2 sub / 1 pixel

Pentile RGB



Lower B/E point by reducing fixed costs


Lower B/E Point by Reducing Fixed Costs

In response to accelerating use of OLED in smartphones, JDI is making further business & corporate structural reforms to keep pace with changing market.

Currently planning fundamental fixed cost cuts in line with a business scale until automotive & non-mobile business reach full scale.


JDI is implementing forceful policies aimed at lowering B/E point ASAP & is

accelerating the cultivation of future sources of earnings


Forward Looking Statement:Any information related to market trends or industries mentioned in this document is based on information available atpresent and JDI does not guarantee that this information is accurate or complete.Any plan, estimation, calculation, quotation, evaluation, prediction, expectation or other forward-looking information in thisdocument is based on the current assumptions and beliefs of JDI in light of the information currently available to it, andinvolves known and unknown risks, uncertainties, and other factors. Such risks, uncertainties and other factors may causeJDIʼs actual results, performance, achievements or financial position to be materially different from any future results,performance, achievements or financial position expressed or implied by such forward-looking information. Such risks,uncertainties and other factors include, without limitation: economic conditions and individual consumption trends in Japanand overseas, currency exchange rate movements, trends in the market for smartphones and other electronic equipment,the management policies of our major business partners and fluctuations in the price of raw materials.

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Fourth Quarter & Full Year Fiscal 2016...Japan Display Inc. May 10, 2017 Financial Results Fourth Quarter & Full Year Fiscal 2016