Hello, everyone. We are going to start Japan Display's earnings briefing for March 2024. Thank you for joining us today. Today's agenda includes an overview and earnings report for March 2024, forecast for March 2025, and the launch of eLEAP, the next generation OLED. You can find the materials we'll be using on our website. Please note that we are recording today's briefing for YouTube. Our CEO, Scott Callon, and CFO, Hiko Sakaguchi, will talk today. Let's start. Scott, your turn.
Thank you everyone for joining. Let's jump into it. Page four. The most important thing that we're working on is eLEAP, and I'll go into some of the detail. That's our next generation OLED technology. We will go into mass production this year in December. It's an extraordinary game changer and an important one. Look, we understand we have been deeply unprofitable for a long time. It's structural. It's based in a lack of competitive advantage. It affects, in fact, the broader display industry, where too many people are doing high capital intensity investments with low profitability. We've got to do something brand new and different. The firm has spent over 10 years developing this technology. We do think it's a winner, and it changes everything.
We go from having a technology set that is not appreciably different from some very good competitors, to being far advantaged, and that's what we expect to deliver for you this year. eLEAP is coming, and we just can't wait for it, meaning we've got to continue to do things to transform the firm and its profitability. The second thing that we delivered on this year was sales are down, and that was deliberate. We're exiting a highly commoditized, low profitability and no expectation for it to be profitable LCD smartphone business. Yet we've got to drive higher profitability at the same time. So we've lowered our breakeven point by, and we call it relentless, and I think it is relentless. We just keep on going at this, folks. Fixed cost reductions and higher productivity.
The environment continues to be super challenging, and we have to run for it anyway. So we expect to continue to do more in terms of taking out costs and driving higher productivity in our business, and we'll be EBITDA positive in the second half of this year. A lot of things happened this year. A lot of things driven by us and a lot of things that kind of. I shouldn't say a lot of things. Something very, very important happened on New Year's Day, which was deeply unfortunately, that massive earthquake in Ishikawa Prefecture. We have an auto fab in Ishikawa. It's actually super important to the global auto display supply chain, given how important we are to global auto displays. I mean, the good news is, and this is barely good news because it was such an extraordinary difficult and deadly event.
We did respond immediately. We fixed everything we need to fix. We ran forward, and it turned out to have minimal earnings impact. But it was a very, very significant event that we had to deal with across the firm in January this year. We will continue to take out fixed costs and to drive higher earnings. We are bringing to production to end at an older, less competitive G4, so fourth generation Tottori Fab. This is following after shutting the Higashiura Fab, which is G3.5. We are migrating more of our capability to our G6 Mobara Fab and our G4.5 Ishikawa fabs, both of which use a higher-end technology called LTPS in the LCD space. And of course, Mobara is our chief, our major OLED fab. We continue to deliver on what we need in terms of technology development.
As I said earlier, this is all about us creating tech that no one else has. I mean, there is not a problem with having capital intensity like a TSMC if you are able to do things that no one else does. Our goal actually is to take both capital intensity out of the business and to build up a portfolio and a set of capabilities that no one else is capable of matching. We acquired JOLED engineering talent. These are some really world-class OLED engineers. Our future is OLED. We think the world's displays future is OLED also. We continue to focus on sustainability, and we are announcing support for TCFD in the last year. The OLED business is profitable. You should think of JDI as two technology sets.
One of is very unfortunately, and this is something we have worked on, we need to continue to work on, which is the exit out. It is an exit of our LCD business, which is deeply unprofitable. The good news, however, is OLED business, which is the future, is profitable. We are running at 100% fab utilization. Customer demand exceeds capacity. We are going to meet that demand with eLEAP, which is our next generation OLED, which is even better than what we have today. But the business is profitable and will continue to be profitable. We are progressing discussions to increase our eLEAP capacity by a lot, by 50x, in China, and we expect to report something on that this year. As I just pointed out, the LCD business, however, is unprofitable, and we need to do something about it, and we will get it done.
There is an ongoing shift in our activity from LCD to OLED, and I will talk about it. Again, it is a blank. That is why I think that is important. It is the case, however, that our LCD product range will remain relevant, particularly in longer tail segments like autos and industrial for a while. In that context, there is a tight supply of high performance LTPS, which is what we excel at. I think there is an opportunity to do non-China, non-Taiwan production in this product set and to drive higher fabulization and actually drive industry consolidation. We are not alone. This is this business. We have had too many competitors with too much capacity. We are consolidating capacity. Our competitors are doing so also. Finally, we appear to be at a point where there could be a structural transformation across the industry.
We're also moving ahead. As you know, we're building eLEAP in Japan. As I pointed to, we expect to do that in China. We're also having conversations, multiple conversations, about doing something in India also. Here's what has happened across the year in the various segments. We have two core segments, Automotive and Smart Watch and VR, both of which are core. We have a LCD Smartphone segment, which is non-core. Automotive is ever so slightly down because we're exiting from unprofitable products. On the other hand, up big in smartwatch and VR. OLED is up 74% year on year. VR is also up, driving greater than 20% year on year growth. What's happening in LCD Smartphone is an exit, so we're pushing this down hard. This allows us to focus our engineering resources on our next gen tech, which will be JDI's.
You should also know that we will reenter smartphones with eLEAP. This is a huge market. It has demands and requirements that eLEAP will address very well, and we expect to reenter there. This is what I have on the broader overview. Hiko Sakaguchi will talk about the numbers, and we'll come back to more business activity.
All right. I'm going to talk about the earnings results for the 2023 fiscal year, which was last year. I'm going to follow on talking about the forecast for the 2024 fiscal year, which is the current year that we're in right now. We're looking at page 12 right now. These are the results for the fiscal year last year, the 2023 fiscal year. As you can see, sales was down 12%. In terms of numbers, we were down about JPY 30 billion versus the previous year. However, despite the top line coming off, our profit lines, EBITDA and operating profit in particular, have shown significant improvement. This is on the back of what Scott mentioned earlier. We've really taken out a tremendous amount of fixed costs out of our system. We've boosted our overall productivity.
We've worked hard at lowering our break-even point, and that's really what's allowed us to improve on our profit lines, despite the decline in our top line sales. Net income came in at a JPY 44.3 billion loss. Year on year comparison, that's a worsening of about JPY 18.5 billion versus the previous year. On a normalized basis, we're actually doing better. If you recall from last year, we reported two significant one-off extraordinary gains last year. One of them was a JPY 15 billion gain from the forgiveness of debt, and the other one was a JPY 13.5 billion gain from the sale of a former subsidiary. If you actually normalize for those two one-off events, we're actually slightly better than we were last year.
So that means all of our profit lines, starting from operating profit down to net income, including EBITDA, are actually better than they were last year. I'm going to be focusing mostly on full year-to-year comparisons. This slide here in 13 actually talks about the standalone fourth quarter and its comparison versus to the standalone quarter, fourth quarter the previous year. I'm going to be skipping the quarter-on-quarter slides and focusing on the year-on-year comparison slides, which takes us to slide 14. This breaks down our top line sales into our normal categories of core businesses, which is our Automotive and Smartwatch VR, as well as the non-core businesses, which is our LCD Smartphone. As Scott mentioned earlier, the LCD smartphone business is down as expected, as we're working towards exiting that. The core businesses overall are up very strong.
Core businesses as a whole are up 6% year-on-year, mostly driven this year by smartwatch VR, which saw extraordinary growth, especially in OLED. As you see there, our OLED business was up 74% year-on-year. So tremendous top line growth there. Our Automotive business was down ever so slightly, pretty much on the back of us exiting specific unprofitable products and lines within our Automotive business. Again, I'm going to skip slide 15, which talks about the standalone fourth quarter comparison versus the previous year, and go to slide 16, which now takes a deeper look at the change in operating profit from a year earlier, the 2022 fiscal year, into the year that just ended, the 2023 fiscal year. As you see, we've significantly shrunk our operating loss, down from JPY 44.4 billion in fiscal 2022, down to JPY 34.1 billion in fiscal 2023.
What you see in front of you is the attribution of how we achieved that. The biggest contributor there was, as you see, fixed costs. The closure of the Higashiura Fab, as well as just streamlining our production at our flagship Mobara Fab, is really what contributed to that. You see in the mix line there how OLED is actually starting to contribute to our overall profitability. As we take down our less profitable LCD smartphone business, and also as we exit some of the unprofitable automotive lines, you're seeing a greater weighting of the more profitable OLED business coming into play. So what you see there in terms of that JPY 2.7 billion positive contribution from mix is really that relative weighting of our profitable OLED business coming in there.
Finally, in the other line, that JPY 4.5 billion uplift right there is a fall off of a fairly significant inventory valuation loss that we reported in the fiscal 2022 year, which fell off into the fiscal 2023 year. Again, this slide here in 17 talks about the standalone quarter comparison, so I'm going to skip this, which takes us into the forecast now for the current year, the year that ends in March 2025, what we call the fiscal 2024 year. This is it. Slide 19 shows our forecast for the year. If you look at the far right, we're forecasting top-line sales of JPY 222 billion for the year. That's about a JPY 17 billion decrease versus last year. If you take a deeper look at the segment breakdown of that top-line sales, you'll see that we continue to shrink our LCD Smartphone business.
That's the single largest contributor of the fall in sales, and that's only to be expected as we continue to shrink and eventually exit, over the medium to long term, the LCD Smartphone business. Automotive is effectively flat. We're taking care of a few remaining lines of unprofitable products and businesses. As we shrink that, you see Automotive coming in flat. Most importantly, our core growth business, the smartwatch and VR, continues to grow strongly, following on from the strong growth that we had last year. I think importantly here is the fact that we're forecasting an JPY 11.7 billion loss for the EBITDA line for the entire year. But if we take a look at the breakdown between the first half and the second half, we're actually forecasting for EBITDA to turn positive in the second half.
That's a significant achievement that we're expecting in the second half of this year. Otherwise, we're looking at operating profit improving to JPY 18.2 billion loss and net income improving to a JPY 26.6 billion loss. Once again, we're achieving these significant improvements in our profit lines despite an ongoing reduction in the top line. It really shows that we're really making very lean our business structure. We're taking out a lot of costs, we're streamlining our operations so that we're able to deliver improvements in profitability despite declining top-line sales. As we continue to expand the business, new businesses like eLEAP come into play, and the top line turns to growth, then we're going to get a significant operating leverage in our profit lines in the future. The final slide here is slide 20.
This talks to the attribution of how we're going to be improving our operating profit line from the JPY 34.1 billion loss last year to our JPY 18.2 billion forecast this year. As you see, the single largest contribution is that mix line right there. It calls for an JPY 11.2 billion uplift. The primary drivers of that continues to be OLED. As we continue to take down our LCD Smartphone weighting and a little bit of our unprofitable Automotive lines, and we continue to grow the OLED, it's just that relative weighting of the more profitable OLED business kicking in in the mix there. The other thing you see there is, as a follow-on from last year, we're expecting to deliver some licensing income from our eLEAP and HMO businesses in the second half. So that's the single largest contributor in terms of the uplift.
What you see on the other line is that we will continue to see a little bit of fall off of some inventory valuation losses versus last year. But we're also going to affect much tighter inventory control, and we're going to streamline our operations. That's going to be another big part of how we improve operating profit for this year. I guess, I'm sorry, this is the last slide here, 21. This shows the progression of operating profit from the first half of this year into the second half of this year. It really shows how on an accelerated path, we're going to be really strengthening our profitability in the second half of this year, and this is really what's going to be a key driver of how we get EBITDA to turn positive in the second half.
As you see there, it is predominantly volume and our eLEAP and HMO licensing income. Volume, as I mentioned earlier, is going to be largely driven by partly from our continued growth in OLED, but also, as Scott mentioned earlier, there is a unique opportunity out there for high-performance LTPS panel shipments. There is a shortage in the market, yet demand is very strong. We have got capacity. This is a great way for us to completely fill our fabs. We are going to try to go after that business, and if we can get it, we are going to see some positive contribution in that volume column right there, in addition to the licensing income that we expect from eLEAP and HMO. That is really what is going to drive that accelerated improvement in the second half and get us to EBITDA positivity in the second half. That is all I have for our earnings.
Thank you very much.
Two other sections in the presentation, the business and the METAGROWTH 2026 update and the eLEAP launch. I am actually going to jump through this one. Look, this is a lot of material here. You can skip some slides also. We do believe we should provide more information than less. It is our job not only to deliver results, but be transparent about how we are thinking about where those results are coming from, how we are thinking about the firm and the upside and the opportunity and technology, and we try to give you more information rather than less. But at the same time, we are not intending to make this a three-hour presentation. There is information deeply relevant to the firm. We spent a lot of time creating it.
We would be delighted if you would read it, but I am going to jump to and make a decision as to what is most fundamentally important to discuss with you today, and that is eLEAP. It is truly transformational for the firm and we think transformational for the global display industry, which means for billions of consumers. Let me go slide by slide here, because this is so critical. This is what eLEAP stands for, environment positive lithography with maskless deposition, extreme long life, low power, high luminance, and any shape framing. That is what eLEAP is. Here is kind of a key tenet of how we are running the firm. We do think OLED is the winning display technology, and we will talk about that, why. It is better. It is the best tech out there. It has got the best price performance.
We believe it's going to become the overwhelming display market leader. We think within OLED, eLEAP is the winning OLED technology. To start to that, look, this is not just us. We serve customers in the world. We don't believe in taking a view and plunging forward on it. This is, of course, deeply linked into the performance characteristics of the technology and its ability to respond to customers' needs. The plain fact of the matter is that OLED is better than LCDs. The biggest difference is that LCDs require backlighting. With OLED, it's organic. Literally, it is organic. You have self-illuminated pixels. It means you can make your OLED displays ultra-thin, lightweight, low power. You have perfect blacks, no graying from the black light. You have beautiful colors. They're natural, they're organic. It turns out actually, LCD colors are not.
Ultra-wide viewing angles, superb video performance. OLED is much faster than LCD. LCD is by definition rigid. It cannot be bent, and you can do a little bit of curvature. It's not flexible and customizable. OLED is fantastic. It truly is. That's why the world is cutting over to it. We put three customer segments on the page, all of them big, smartphones, automotive, notebook PCs. It's not all of these segments, but the shift is happening from LCD to OLED. I told you I'm going to talk on every page, but I'm not going to make this a three-hour presentation, so we'll move forward. OLED is winning. It's worth raising the question if it's winning now against LCD, whether or not there are other competitive alternative technologies, and we believe actually that OLED will dominate these also. MicroLED, Micro-OLED.
Micro-OLED sometimes is called OLEDoS, OLED on silicon. The difference between OLED, which is done on glass substrates, and Micro-OLED, which is on silicon. Silicon is small and very expensive, but the key difference is what substrate you're using. OLED is on glass, as I said, and Micro-OLED is on silicon. We think OLED dominates both these techs. There are just too many unresolved technical issues, production yield challenges, and high costs. Major reports of a major cancellation in the MicroLED space in the last couple of months as customers begin to understand that the future is, in fact, OLED. In a good way, OLED is a mature tech, meaning it's got super robust ecosystem. It's an economies of scale, very sophisticated set of capabilities in it. It's the winning tech. The challenges with MicroLED and Micro-OLED are specific to both technologies.
What we're saying here is that we are seeing in our customer product roadmaps also that OLED is going to win. You need to have a play in OLED in order to serve the world. I think we get the impression that people think OLED is really kind of out there. It is because half the smartphones are using OLED and all the tie-in smartphones are. By the way, that penetration in the smartphone market is growing year after year, but one should not be misled by half, 50% market share in smartphones. OLED is almost nowhere right now in autos and notebook PCs. It's getting spec'd in. There's a massive growth upside in this market as OLED takes over. That's why eLEAP's important. It's important to us and it's important to the world.
It is the case that OLED does have some inherent issues. One of them is short lifetime, and the other one's high production costs. eLEAP allows you to solve for both. It's a deeply advantaged form of OLED. It's an evolved form of OLED, if you want to put it that way. It powerfully moves OLED forward. I would want to spend a lot of time on this slide, but I guess I won't. The thing you should know is that what is interesting about eLEAP from a production perspective is that we don't use so-called fundamental masks. We don't use masks. The result of that is you have this huge mass in conventional OLED with very poor precision.
You have to have You can't really move the mass around that well, so you have to have big kind of If you look at the page, you see all this black space in conventional OLED because you can't put the pixels together because there's not enough precision in moving around these big metal mass. In order to avoid R and G and B being on top of each other, you have to space out the pixels. What that means is you get much less brightness area. We don't talk about this as much, but it also means that you can pack not only more brightness into any eLEAP because we substitute for mass photolithography, so we're using the semiconductor process, so we can pack the pixels together without worrying about them being on top of each other.
It also means you can get much higher resolution out of eLEAP, so there is obviously a broad customer set. Customers like high resolution and beauty, and also particularly in the VR space where you use these big lenses in order to kind of make a very small screen seem big. They cut the user's understood or experienced resolution by a lot. So high resolution is something very, very important, and we think eLEAP is able to deliver super high resolution VR over time. That will be important. Anyway, so you get super high brightness. You get long lifetime because the problem with conventional OLED is you have all this black space, so you're pushing a ton of current through kind of a primarily black display, and it burns up the pixels.
By going to eLEAP, you don't have the pixel burnout, so you get a lifetime, and it's nonlinear. You get actually three times the lifetime. You get lower cost with eLEAP. On the average, we think roughly 30% lower cost. It's linked to not having fine metal masks and all their costs. You don't have fine metal masks related production downtime as you're replacing and cleaning and maintaining the fine metal masks. You get higher fabulization. So the good news is, and this is why the technology is going to win, it's not only better, it's less expensive. It also, because you're not moving these massive metal masks around, and much less energy consumptive, so in other words, a much more energy efficient production process. That means you actually have 50% less CO2 emissions during your production process.
For a 14-inch notebook, the amount of CO2 emissions goes down to something on the order of 14 kg, 30+ lbs per notebook. This is non-trivial. If you want to create a world, and look, we take the view where we hope you join us, is that climate change is real and that we should do something about that eLEAP is a powerfully green tech that can help solve a major planetary problem. The development is going very fast. We started with 1.4 in. First customer samples in September 2022. We increased the display by 58x by mid last year. We are now driving into much higher sample sizes, and we will have some announcement about that this year. We are also driving much higher functionality out of it.
We are now, for example, doing 1,600 nits through eLEAP with a single stack, meaning there is a way to try to get higher brightness by doubling up your OLED with this so-called tandem structure. It makes both the product, the manufacturing process more complex and it makes it more expensive. You want to have a fantastically extraordinary performance display at a price point that is truly mass and affordable. eLEAP is the solution. This is the year of eLEAP. I mean, it has been a long time coming. We have worked on this technology for over 10 years. It has accelerated over the last couple of years. Our current production yield is over 60%. That is actually very good. There are companies out there that are shipping conventional OLED with only kind of yields of 20%, 30%. By the way, they are profoundly loss-grading.
We do, but we are already at 60%. We are going to go to production launch in December this year. We actually, and our goal is to get above 90% yield by that time. We think it is very viable. But this is a technology that we are driving forward very, very fast on and we think is truly a game changer for the global display industry. Which is to say, our sense is there have been two display revolutions. One was kind of the cathode ray tube, which was fantastic, right? I mean, you could actually have moving pictures in your home. But if you are over my age, you can remember kind of like having a house party and having kind of like five of your neighbors over to move your 120 lb or 200 lb TV.
The second revolution was LCDs, which took you to compact, energy efficient high-resolution screens that you can move around without having five people help you do it. OLED is dramatically progressive display technology, but we do not think it is complete. You need kind of lower costs and longer lifetimes, and eLEAP is going to achieve that. Our strategic direction is, we have taken, it is the operating hypothesis of the firm that OLED is going to win, and you need to win in OLED. That is a key element of any investment you make with JDI as to your view on what you think the future is OLED and the TAM is for OLED and the TAM is for eLEAP within OLED.
We think OLED's a winner, we think eLEAP's a winner, and there's an opportunity to deliver extraordinary customer value that we have not delivered because we didn't have this technology. This is going to be zero one. We turn on the switch, we begin shipping eLEAP, and we're going to do it hopefully in size. In that sense, in the work we're continuing to do in China, in cooperation with government in Wuhan to reach an agreement is super important. The announcement it would increase our production if we get this done, production capacity over 50x. This technology is very relevant, has a massive TAM. We need more of it, pardon, less of it. This is a very important element of extending JDI and eLEAP's reach to kind of the world. Not only China, we also have ongoing discussions in India.
We think that these are both deeply relevant, massive and growing markets for us to have a presence, and they will be needing the presence. That completes today's presentation. Skipped over a fair amount. Happy to take any questions. Again something very, very important is coming out to you this year, and we look forward to delivering the goods for you. Happy to take any questions or comments.
If you have a question, please click the hand raise icon. Again, if you want to ask a question, please click the hand raise icon. It looks like there are no questions, so we will end today's briefing. I would like to express our sincere appreciation for your participation. Thank you very much for joining us today.
Thank you, everyone. We went forward. Thank you.