Japan Display Plunges After Forecasting Surprise Loss

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Japan Display Inc., a maker of mobile-device screens for Apple Inc., plunged after forecasting a surprise annual loss because of delayed shipments.

The shares tumbled by the daily limit of 18 percent to close at 359 yen in Tokyo trading. Japan Display couldn’t secure the necessary parts to meet Apple orders, causing the delay, a person familiar with the matter said yesterday. Shipments to Sony Corp. will fall in the second half, said the person, who asked not to be identified because the information isn’t public.

Japan Display expects a net loss of 10 billion yen ($94 million) in the year ending March, compared with a previous forecast for net income of 26.8 billion yen, according to a statement yesterday that didn’t identify its customers. Apple is planning to unveil its latest iPads at an event today, a person familiar with the matter has said, as it seeks to revive tablet computer sales, while Sony last month widened its loss forecast to write down its faltering smartphone business.

“This is a problem with production efficiency,” said Masahiko Ishino, an analyst at Advanced Research Japan Co. in Tokyo. “The client may have been Apple, but the result is that the loss in efficiency is what caused this.”

The company’s German-traded shares fell 9.4 percent yesterday. Japan Display was cut to underweight from overweight by analysts at JPMorgan Chase & Co. and the stock was lowered to neutral from buy at Nomura Holdings Inc.

IPO Flop

Takashi Takebayashi, a Tokyo-based spokesman for Apple, didn’t respond to a request for comment. Chie Tanaka, a spokeswoman for Japan Display, and Mai Hora, a spokeswoman for Sony, declined to comment.

Japan Display, which held an initial public offering in March, lost 60 percent since its listing.

“The difference between Japan Display and Chinese manufacturers is shrinking,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “The ability of Japan Display to compete will fall, as will the value of the company.”

The forecast cut is due to iPhone 6 production delays as well as a decline in shipments of high-margin displays to major global smartphone and tablet makers, Credit Suisse Group AG analyst Shunsuke Tsuchiya said in a report.

Apple suppliers including Nissha Printing Co. and GT Advanced Technologies Inc. have suffered as a result of their relationships with the iPhone maker, according to Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore.

Plant Closing

GT Advanced Technologies this month asked for bankruptcy court permission to shut down its synthetic-sapphire operations, citing terms of a contract with Apple that it called “oppressive” and “burdensome.”

Japan Display will shut its factory at Fukaya north of Tokyo, resulting in a charge of 7 billion yen, and the company won’t pay an interim dividend, it said. The company gets about 32 percent of sales from Apple while Sony is its second-largest client, accounting for 9.4 percent of revenue, according to data compiled by Bloomberg.

Japan Display was created in 2012 when Sony, Toshiba Corp. and Hitachi Ltd. spun off their panel businesses to state-backed Innovation Network Corp. of Japan after failing to keep pace with South Korea’s Samsung Electronics Co. INCJ sold the company in an initial public offering in March, with the stock plunging 15 percent on debut.

The company lowered its annual operating profit forecast to 6.5 billion yen from 40 billion yen, according to the statement.