Earnings Forecast

January 28, 2021 (¥B)
  FY2019 FY2020   vs. New Full-Year Forecast
  Results 1Q Results 2Q Results 3Q Results 4Q Forecast Full-Year Forecast vs. FY2019   FY2020 Forecast as of Oct. (Δ)
(Δ) (%)
Orders 287.8 61.5 64.1 95.1 89.3 310.0 +22.2 +7.7%   260.0 +50.0
Sales(*1) 275.9 66.7 77.4 78.1 82.8 305.0 +29.1 +10.5%   275.0 +30.0
Operating Income 58.7 13.5 17.4 15.3 20.8 67.0 +8.3 +14.1%   52.5 +14.5
Operating Margin 21.3% 20.2% 22.6% 19.5% 25.1% 22.0% +0.7pts     19.1% +2.9pts
Income Before Tax 58.6 12.9 16.4 13.9 20.8 64.0 +5.4 +9.3%   50.9 +13.1
Net Income 53.5 10.6 13.9 12.0 25.0 61.5 +8.0 +14.9%   42.5 +19.0
Net Income Margin 19.4% 15.8% 18.0% 15.4% 30.2% 20.2% +0.8pts     15.5% +4.7pts
Backlog 91.0 85.7 72.5 89.5 96.0 96.0 +5.0 +5.5%   76.0 +20.0
R&D Expenses 40.1 9.9 10.7 10.4 11.0 42.0 +1.9 +4.7%   41.0 +1.0
Capex 9.9 2.6 3.2 3.4 3.8 13.0 +3.1 +31.3%   12.0 +1.0
D&A 10.9 2.6 2.8 3.1 3.0 11.5 +0.6 +5.5%   11.0 +0.5
Exchange Rate(*2) 1 US$ ¥109 ¥108 ¥107 ¥105 ¥105 ¥106 ¥3 Appreciation   ¥106
1 Euro ¥121 ¥118 ¥123 ¥124 ¥125 ¥122 ¥1 Depreciation   ¥120 ¥2 Depreciation

(*1): Intersegment transactions have been eliminated from totals
(*2): Our latest forecast for the impact of exchange rate fluctuations on FY20 operating income is plus ¥700 million per 1 yen of JPY depreciation vs USD, and minus ¥150 million per 1 yen of JPY depreciation vs the euro

In the first half of FY2020, sales of SoC semiconductor test equipment fell short of the level reached in the previous fiscal year due to the escalating conflict between the United States and China, but competition among smartphone manufacturers subsequently became livelier, smartphone performance saw further gains, and conditions improved in the automobile and industrial equipment markets. Based on these trends, sales in the fourth quarter are expected to significantly exceed our October forecast, as in fact third-quarter sales also exceeded our forecast for that quarter.
Regarding memory test equipment, Advantest anticipates strong inquiries from customers in the fourth quarter amidst memory semiconductor performance improvements and expectations for a turnaround in the memory supply / demand situation.
Based on the demand outlook for these, our flagship businesses, and our business results for the third quarter consolidated cumulative period, Advantest has again revised our full-year consolidated business forecast for the current fiscal year, as follows. Orders: (Y) 310.0 billion (was (Y) 260.0 billion as of October 2020); sales: (Y) 305.0 billion (was (Y) 275.0 billion); operating income: (Y) 67.0 billion (was (Y) 52.5 billion); income before income taxes: (Y) 64.0 billion (was (Y) 50.9 billion); net income: (Y) 61.5 billion (was (Y) 42.5 billion). Our earnings forecast for the fourth quarter of the current fiscal year is based on exchange rate assumptions of 105 yen to the US dollar and 125 yen to the euro. Given the progress of our mid-term management plan, which concludes in the current fiscal year, as well as our future business outlook and other factors, in the fourth quarter Advantest expects to record deferred tax assets that are likely to be realized during a certain fixed period in the future. The above forecast takes this into account.
Regarding the impact of the COVID-19 pandemic on Advantest, while investment in semiconductor test equipment for devices used in automobiles and industrial equipment stagnated for a considerable time, the expansion of remote work has accelerated demand for test equipment for semiconductors used in electronics. Advantest estimates that these shifts in our business environment have netted out to a positive impact on our results for the cumulative period.
However, the pandemic is still un-subdued, and uncertainty in the global economy remains high, with lockdowns having been renewed in some areas and being considered in others. Therefore, Advantest will place the utmost importance on responding flexibly to changes in our external environment as Advantest conducts our business activities.
On the other hand, the pandemic is an opportunity to accelerate the long-heralded digital transformation, centered on 5G communications. This will expand demand for high-performance, highly reliable semiconductors over the medium to long term. Advantest also anticipates that business opportunities for Advantest will expand over the medium to long term as customers experience growing needs for higher value-added semiconductor test solutions.
On this long-term perspective, Advantest has not only reinforced existing businesses such as semiconductor wafer level test and package level test, but have also entered the field of system / module level test solutions, and plan to expand our solutions in the data analytics sector by utilizing test data for semiconductor process analysis. Going forward, Advantest will continue to work toward achieving the sales target of (Y) 400.0 billion specified in the base scenario of our "Grand Design" mid- to long-term management policy, which concludes in fiscal year 2027.