Financial Review

Consolidated Financial Results of FY2023 Q3 (April 1, 2023 through December 31, 2023)

Overview of Business Results

January 31, 2024(in billion yen)
  Nine months ended
December 31, 2022
Nine months ended
December 31, 2023
As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 412.8 350.7 (15.0%)
Operating income 129.1 62.1 (51.9%)
Income before income taxes 132.9 59.6 (55.2%)
Net income 99.8 47.1 (52.8%)

During Advantest’s nine-month period ended December 31, 2023, despite the ongoing post-COVID normalization, the global economy as a whole experienced further deceleration due to factors such as monetary tightening mainly in Europe and the U.S. and slowing growth in the Chinese economy.

In this uncertain global economic situation, due to deceleration in investments in data centers in addition to a decline in demand for semiconductors used in cornerstone consumer electronics products such as smartphones, personal computers and televisions, the semiconductor market saw a decline in demand for related semiconductors. Although demand is increasing for some semiconductors, such as those related to generative AI, many semiconductor manufacturers implemented inventory adjustment and cut back on CapEx, resulting in a contraction of the semiconductor market in comparison to the previous year.

In Advantest’s semiconductor test equipment business, investment by customers over the last three years was robust led by the acceleration of digital transformation in society. However, weakening of the semiconductor market conditions led to excess capacity among many customers’ supply chains, causing demand for our products to decline significantly compared to the corresponding period of the previous fiscal year.

As a result of the above, net sales were (Y) 350.7 billion (15.0% decrease in comparison to the corresponding period of the previous fiscal year). In terms of profit, due to a decline in sales and a lower sales mix of higher margin products as well as an increase in raw material cost, operating income was (Y) 62.1 billion (51.9% decrease in comparison to the corresponding period of the previous fiscal year). Income before income taxes was (Y) 59.6 billion (55.2% decrease in comparison to the corresponding period of the previous fiscal year) due to an increase in financial expenses caused by foreign exchange losses. Net income was (Y) 47.1 billion (52.8% decrease in comparison to the corresponding period of the previous fiscal year). Average currency exchange rates in the nine-month period ended December 31, 2023 were 1 USD to 142 JPY (135 JPY in the corresponding period of the previous fiscal year) and 1 EUR to 154 JPY (139 JPY in the corresponding period of the previous fiscal year). The percentage of net sales to overseas customers was 96.1% (96.6% in the corresponding period of the previous fiscal year).

Semiconductor and Component Test System Segment

(in billion yen)
  Nine months ended
December 31, 2022
Nine months ended
December 31, 2023
As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 293.5 240.0 (18.2%)
Segment income (loss) 122.3 65.3 (46.7%)

In this segment, sales of SoC semiconductor test equipment for automotive and industrial equipment-related semiconductors were solid. However, stagnant smartphone market conditions and a slowdown in server investment led to a drop in sales of products for high-performance semiconductors related to these devices. Sales of memory semiconductor test equipment were comparable to the corresponding period of the previous fiscal year, as robust tester demand for high-performance DRAM offset the impact of the deteriorating memory semiconductor market conditions. Profitability in this segment declined as a result of lower sales as well as a deteriorating product mix and higher parts procurement costs.

Mechatronics System Segment

(in billion yen)
  Nine months ended
December 31, 2022
Nine months ended
December 31, 2023
As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 42.3 35.9 (15.2%)
Segment income (loss) 10.0 4.9 (51.4%)

In this segment, sales of device interface products and test handlers decreased due to a decline in demand for semiconductor test equipment. Sales of SEM metrology products also decreased, as product deliveries to customers progressed in the previous fiscal year.

Services, Support and Others Segment

(in billion yen)
  Nine months ended
December 31, 2022
Nine months ended
December 31, 2023
As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 77.1 74.8 (2.9%)
Segment income (loss) 10.1 4.3 (57.6%)

In this segment, maintenance services sales increased as Advantest’s installed base grew. However, in our system-level test (SLT) business, which has high sales exposure to a limited number of customers, sales were weak due to declining demand in semiconductors for consumer applications. Moreover, Advantest’s ongoing investments in reinforcing SLT production capabilities in anticipation of mid/long-term business growth caused profit in this segment to significantly decline year-on-year. The segment income for the nine-month period includes approximately (Y) 3.2 billion in settlement income. This is mainly due to the settlement of a dispute with the counterparty.

Overview of Financial Condition

Total assets at December 31, 2023 amounted to (Y) 635.0 billion, an increase of (Y) 34.8 billion compared to the fiscal year ended March 31, 2023. This was primarily attributable to increases of (Y) 38.9 billion in inventories, (Y) 10.8 billion in property, plant and equipment and (Y) 10.7 billion in other current assets mainly due to an increase of prepaid taxes, offset by decreases of (Y) 17.1 billion in trade and other receivables and (Y) 9.8 billion in cash and cash equivalents. The amount of total liabilities was (Y) 232.8 billion, an increase of (Y) 1.3 billion compared to the fiscal year ended March 31, 2023. This was primarily attributable to an increase of (Y) 40.8 billion in borrowings offset by decreases of (Y) 22.7 billion in income taxes payable and (Y) 18.5 billion in trade and other payables. Total equity was (Y) 402.2 billion. Ratio of equity attributable to owners of the parent was 63.3%, an increase of 1.9 percentage point from March 31, 2023.