Welcome to JDI's earnings video conference for the fiscal year ended in March 2025. Today, our CEO, Scott Callon, will be explaining the earnings results and other measures we announced today. I'll turn the time to Scott.
[inaudible] March 2025. [inaudible] . The recording. All right. Let's jump into it, everybody. I'm Scott Callon. I'm Chairman and CEO of JDI. We're working off of the FY 2025 threes for the March 2025 full year corporate presentation. We made some announcements today that are deeply fundamental to the future of JDI in a positive way. I will be talking about some of those announcements in detail. This is really more about the forward-looking outlook than the backward-looking earnings. Broad overview of the year, as we made a number of choices, some hard choices, in order to get ourselves profitability, and with more announcements today. We end in production at our Mobara Fab by March 2026 to drive our BEYOND DISPLAY strategy. I'll talk about that a little bit in more detail.
This is a high-cost G6 fab. G6 sizing is appropriate if you're going to do displays. We don't think displays are our future, certainly not mass market displays. We will be an ongoing display manufacturer. It's going to be micro displays and smaller displays that take advantage of our core technology. In addition to that, we will be operating as a multi-fab out of Ishikawa, which is a much lower cost fab. It's actually only got a quarter of the operating cost of Mobara. It's got a G4.5 substrate, which makes it far better for producing sensors and advanced semiconductor packaging, which we think is the future of JDI. We have a broad set of technology capabilities, and we're deploying them in a new area. We are continuing to be in discussion.
Again, this is a fabless model, so we won't have our asset-heavy fab backing this to take our eLEAP technology, which is the world's most advanced OLED technology, into a global ecosystem with foundry partners. We highlight that we have a strategic investment and partnership with OLEDWorks in the U.S. I'll talk about a little bit more later. I think it's really exciting. We have an opportunity to do something really substantial in the U.S. They're fantastic partners, and we look forward to achieving that for all of you. Broad overview is we had a tough year. Welcome to JDI's past, and we need to make a significant number of changes. Sales were down 21% year-on-year. We had lower operating profit and EBITDA. We took some losses from restructuring and shutting down our Tottori Fab, and now we'll be shutting down our Mobara Fab.
We need to do something radically different, and we are. Today's announcements, and I'll talk about some of these in more detail later. We are doing a significant workforce reduction. This was my final choice for the firm as JDI CEO. I deeply apologize to our employees because we are doing something that impacts them and their lives. If we do not do it, we do not have a future as JDI. I express my deepest apologies to everybody who is affected by this. I'll talk about this later. We are taking AutoTech, which is an independent business unit, effectively promoting it to be a new subsidiary to increase the speed of its decision-making, to expand external funding opportunities and broader strategic options. We announced today an MOU with Ichigo, who is our 80% shareholder. I am also from Ichigo. I have obviously not been involved in this transaction because I am a related party.
This was something that JDI asked for Ichigo, not the other way around. We have a desire to pay down our JPY 65 billion of debt. We are going to do that by transferring the Mobara Fab to them and part of our IP. Again, I'll talk about this later. The final bullet point is I will be resigning to take responsibility for our business performance. We have not hit our targets. CEOs need to win. We need to get things done. As we say we are going to do, I have not gotten it done, and I need to take responsibility for that. I will be stepping down, and Jun Akema will be our new CEO from June 1st. At the same time, I not only need to take responsibility, I need to be responsible.
I have been involved in today's actions, which I think provide the basis for us to have an ongoing JDI. Scott Callon, the CEO, is going to end. JDI is not going to end. We are going to run forward harder and faster, and I'll explain some of the actions that we have taken on that. I will also be staying as chairman, a non-executive chairman without compensation. I have an ongoing responsibility to shareholders to make sure JDI runs forward, but I am stepping down to take responsibility. We have not hit our numbers. Somebody needs to take responsibility for that, and I am. Broad overview is auto business has been relatively flat year-on-year. There has been a little bit lower sales on continuing low margin products, a little bit of lower end customer demand. Things have gotten a little bit shaky in the world.
As I mentioned, we are taking AutoTech to become a new subsidiary, and we think that is interesting. The Ishikawa multi-fab is going to be a foundry for that business. Smartwatch and VR has been harder. A little bit of loss of demand on the part of our end customers in both spaces. We are again focusing on the Ishikawa multi-fab on higher margin products, which will be a path running forward, and eLEAP is going to transition to a fabless model. This is a strategic exit, so the fact it is going down to zero is directly part of the plan. Earnings were bad. There is no other way to put it. This is why we are making all the changes we are making. Sales being down 96% on a non-core business. Of course, part of the plan, but we need to do something radically different, and we are.
I am going to jump ahead. There is a lot of material. I will happy to take questions on it, but things are not going per plan. What are you going to do? That is the key issue here. I would point out that we are not putting out a forecast right now. That is because we are doing a whole bunch of things. A whole bunch of good things, and we think there is upside, but when you have this super volatility based on what things are going to happen, it does not make sense to put out numbers that we are possibly going to have to rework. Because we are a careful Japanese firm with auditors, and they look at our forecast, and we put out numbers that we think reflect a realistic view perhaps of what the upside looks like.
They may not be happy with it, so they want us to put out low numbers, but the low numbers are not necessarily realistic. I do not think it is a negative that we are not putting out a forecast right now. We will put out a forecast as soon as possible to get more insights, heightened visibility on the details and other things that we are doing. Here is what is most important. I announced the workforce reduction today. We were too slow, and this is my responsibility in taking our costs. We had a number of opportunities. There were upside opportunities. We worked on them. I think the structural drag on profitability in this business is big. We have come to understand that. We came to understand it last year, which is why we made the cutover to the BEYOND DISPLAY strategy in November.
But it is not enough for us to build new revenue opportunities. We need to build a better cost structure. We are absolutely hammering our costs. You will see up above, you get strategy diffusion. This is going to be earnings growth that comes out of moving to more profitable businesses. That gives us JPY +12 billion . These numbers are strong numbers, meaning kind of the solid numbers, we are going to hit them. But the truth of the matter is, anytime you do something that is related to how you are going to interact with customers actually have their own kind of issues and demands and needs. Those numbers can move around a bit based on what customer activity looks like. Again, I will reemphasize the point.
We have really shrunk down our product portfolio to customer products, where customers need us and want us and want to work with us. These are solid numbers, but nothing is as solid as what you can control. We can really control mostly is your costs. As you can see on the page, we are taking down our costs by JPY 56 billion , which is massive. The result of that is this. If the question is, what are you doing that is different? It is this. We are hammering our costs. The closure of the Mobara Fab, the closure of the Tottori Fab, today's announced workforce reduction, other activity across the board on our costs. Literally is in the numbers I just showed you. We could not be profitable even at JPY 300 billion of sales within 18 months because we are taking all these actions now.
The Mobara Fab closes, which is the biggest source of our losses by March of 2026. The workforce reduction all happens this year. We get our breakeven point down 80%. This is the most important thing to know about where JDI is going. With apologies for my failure to deliver on what we needed to deliver up until now, which brings me to an end as CEO. This is not the end of JDI. This is the beginning. We need not only a better strategy, which migrates us out of the chronic losses of the display business and BEYOND DISPLAY gets us there. We need a better cost structure, and we're hitting it and hammering it hard. JDI starts from now. The strategy is called BEYOND DISPLAY. Everything is focused on this. It's holistic. It takes our core capabilities and puts them into areas that are high growth.
I'll talk about that a little bit in detail. We need the right conditions to win. The right technology, the right cost structure, the right speed and flexibility, the right financial stability, the right geographical position, and we have those. The fundamental insight in terms of the change of the business strategy is we're moving from mass market displays, which operate what we call the larger principle. Big displays are better. It means that every year, your substrate, you're making bigger displays on it, so you get less product per substrate. Your economics get worse over time. That's just the fundamental reality of mass market displays. It means in order to try to keep your economics up, you need to have increasingly large sizes of the substrates, which requires CapEx to move to the next few generation.
It's just a very, very difficult business to run any degree of a fab without going to the latest generation. So you go from G2 to G3.5 to G4.5 to G6 to G8 to G10 to G10.5. This is an industry that has worsened economics over time. The Chinese government regards it correctly as a strategic industry. They support the CapEx from their participants who are actually very good, and have the additional advantage of this massive government support. It is a terrible business. So we're shifting from the right to the left. We're going into businesses, semiconductor sensors, microdisplays, that operate on a miniaturization principle. The smaller it is, the better. It means that you get more out of your substrate or wafer. Over time, you can improve on economics over time.
This is the fundamental change that had to happen, is happening with the BEYOND DISPLAY strategy. Let me talk a little bit some of the announcements we made. I touched on it. Today, look, BEYOND DISPLAY is about us becoming better, faster, expanding the range of options. You can think about it as we effectively promoted an independent business unit to subsidiary. It gives you the three advantages that we have on the bottom of the page. You can get independent management decisions and rapid decision-making. Expands possibilities for external funding. This is, with customers, for example, who are really interested in our AutoTech technology set. It includes the ability to expand future strategic options. We could do some realignment of the global industry with who are currently competitors and become partners.
We think this is helpful, in terms of the broad contribution of what we're trying to do with BEYOND DISPLAY. Let's have the best possible operating structure in order to win. We are, as I said earlier, we apologize to all of our employees globally. It's a very hard decision, and it's the only one that we could've made. If you look at our numbers, it's not enough to grow revenues. We've got to take out costs. We were doing a global workforce reduction. We went and spoke with our union in Japan today. We need to have conversations globally based on every location's labor rules and labor practices and take it out again. The annual cost savings that we have on the page, this is Japan only. We will have global activity this year that will give us even more cost savings.
As I mentioned earlier, we are going to transfer our Mobara Fab to Ichigo. You should think of this as a bridge. Ichigo will then on-sell it as an AI data center. We expect to get some participation in the upside for that as JDI in that sale. We'll transfer certain display related IP to Ichigo. The advantage of this is, we pay down the debt. The JPY 65 billion of debt sitting in front of the shareholders. Shareholder value comes after you take care of debt holders. So getting rid of this is hugely advantageous in terms of shrinking enterprise value, putting shareholders in the front of the line, and also cutting the interest costs, so that we can get to have a quicker path to profitability. Ishikawa becomes a multi-fab. We are thinking about putting G6 equipment in it.
We actually have decided to keep it as a G4.5 fab on the display side. We want to do more in the BEYOND DISPLAY area. The G6 we ended up deciding was more legacy than forward-looking, and it makes more sense to focus our resources on G4.5 displays, microdisplays, et cetera, that fit into that substrate well, semiconductors and sensors. As I said, Mobara becomes AI data center, and we're in the process of doing that, but it's going to be ultimately completed by Ichigo rather than JDI. That's the broad framework for BEYOND DISPLAY. I mentioned OLEDWorks, so let me just talk a little bit about that. It's another 40 pages. You should all feel comfortable. I'm not going to talk to you 40 more pages. Thank you for your patience in listening.
Just to step into a little bit on, I think what's really exciting. I think we all know that Foxconn had a plan to go to the U.S. and build a display fab in Wisconsin. That did not work out. The costs were way too high. What I think is really powerful is the work we're doing with OLEDWorks right now, to bring up a fab in the United States using an existing facility, so it'll be very low cost. Using existing equipment, which is likely to come from JDI. Again, very low cost. So the opportunity is to do something really powerful in the U.S. that's low cost. The fundamental challenge has been how do you do this with the right cost structure? Because costs in this business are absolutely fundamental to delivering what customers need.
The Chinese are the cost leaders in this, and you want to be competitive. We have a path, we believe, to achieve that. So it is really exciting and something I look forward to. Well, it may not be me because I am stepping down as CEO. But we as JDI, look forward to showing you that path to go forward. I would add, I am staying as chairman. I will be a non-executive role. The things like OLEDWorks, I can play a role, and I will continue to play that role. But my job as CEO is coming to an end, and I will support the new management team in any way possible in a role as non-executive chairman. I think I will bring it to an end there. As I said, there is a lot of material here.
This is a very robust, holistic strategy rooted in the right kind of business model, the right economics industry that we are going to be in, the right cost structure. It is what I said earlier in terms of having the right of everything in order to win in this space. I am happy to take any questions, if any from the people in the audience.
If you have any questions, kindly click on the right-hand icon. Anybody has any questions? It appears we have no questions today. We appreciate your time and attention during this briefing. Thank you very much for joining us today, and we look forward to our next meeting.
Thank you, everybody. We were—