Financial Review Financial Review

FY2018 (April 1, 2018 through March 31, 2019)

Overview of Business Results

(¥B)
  FY2017 FY2018 As compared to the previous fiscal year increase (decrease)
Orders received 247.8 275.2 11.1%
Net sales 207.2 282.5 36.3%
Operating income 24.5 64.7 2.6 times
Income before taxes 24.3 66.2 2.7 times
Net Income 18.1 57.0 3.1 times

During Advantest’s FY2018, the global economy has continued to maintain its growth trajectory overall mainly due to steady economic growth in the United States. Nevertheless, concerns about the future of the global economy have grown since the autumn of 2018 mainly due to the expansion of protectionist trade policies and the slowdown in growth in China.
Amid these trends in the global economy, the sense of a slowdown in data center investment and in the smartphone market, that have led growth in semiconductors and related industries for the last few years, has intensified. As a result, a slackness in supply and demand across the entire semiconductor market has become clearly evident with major semiconductor manufacturers cutting back on their capital investment plans and moving towards substantial inventory adjustments since the second half of 2018. On the other hand, demand for performance improvements in electronic devices such as data servers, smartphones, displays, and car electronics has remained steady, promoting improved performance and an increase in quantity of semiconductors, which are incorporated into such electronic devices. Semiconductor manufacturers have responded by making active efforts to strengthen their testing capabilities for handling more complex testing and enhancing the reliability of semiconductors, which is directly related to improved performance of the end products. As a result, the demand for semiconductor test equipment has remained robust.
In this business environment, Advantest expanded its market share by demonstrating its strength as a manufacturer with the most comprehensive product portfolio in the semiconductor test equipment industry and capturing demand for new products from a broad range of customers.
As a result, orders received were (Y) 275.2 billion (11.1% increase in comparison to the previous fiscal year), net sales were (Y) 282.5 billion (36.3% increase in comparison to the previous fiscal year), operating income was (Y) 64.7 billion (2.6 times increase in comparison to the previous fiscal year), income before income taxes was (Y) 66.2 billion (2.7 times increase in comparison to the previous fiscal year), and net income was (Y) 57.0 billion (3.1 times increase in comparison to the previous fiscal year), representing an increase in profit year on year. The average currency exchange rates in the current fiscal year were 1 USD to 110 JPY (111 JPY in the previous fiscal year) and 1 EUR to 129 JPY (129 JPY in the previous fiscal year). The percentage of net sales to overseas customers was 94.7% (93.2% in the previous fiscal year). The operating income for the current consolidated fiscal year includes a one-off profit of (Y) 3.5 billion including (Y) 2.5 billion associated with the transfer of a portion of the defined benefit pension plan for the employees of Advantest Corporation and its subsidiaries in Japan to a defined contribution pension plan.

Semiconductor and Component Test System Segment

(¥B)
  FY2017 FY2018 As compared to the previous fiscal year increase (decrease)
Orders received 169.7 206.8 21.8%
Net sales 140.9 211.7 50.2%
Segment Income 28.9 65.1 2.2 times

In this segment, demand for SoC test systems remained at a high level due to progress in performance improvement of application processors, which are key components for smartphones, and the trend towards enhanced testing capabilities in line with improvements in the functionality of display driver ICs including touch sensor integration. As a result, both orders received and sales significantly outperformed results of the previous fiscal year. In the memory test business, although orders received declined from the third quarter onwards due to inventory adjustments for memory semiconductors, sales increased year on year, supported by progress in increasing capacity of DRAM and NAND flash memory.

Mechatronics System Segment

(¥B)
  FY2017 FY2018 As compared to the previous fiscal year increase (decrease)
Orders received 44.0 37.7 (14.2%)
Net sales 35.9 39.2 9.3%
Segment Income (2.7) (0.7)

In this segment, sales of device interface products, which are closely linked to our memory test business, were strong, buoyed by a high level of investment in test equipment by memory semiconductor manufacturers. Orders received were lower year on year due to the impact of inventory adjustments as memory semiconductor manufacturers strengthened their stance on reducing investment from the third quarter onwards.

Services, Support and Others Segment

(¥B)
  FY2017 FY2018 As compared to the previous fiscal year increase (decrease)
Orders received 34.1 30.7 (10.0%)
Net sales 30.5 31.5 3.4%
Segment Income 4.2 4.2 1.1%

Despite the trend towards inventory adjustments in the semiconductor market, semiconductor manufacturers maintained production at a high level resulting demand for our maintenance services remained stable. On the other hand, the SSD test system business saw a slowdown in orders due to stagnation in data center investment.

Overview of Financial Condition for FY2018

Total assets at the end of FY2018 were (Y) 304.6 billion, an increase of (Y) 50.0 billion compared to the previous fiscal year, primarily due to an increase of (Y) 16.0 billion in cash and cash equivalents, (Y) 13.9 billion in trade and other receivables and (Y) 10.8 billion in goodwill and intangible assets. The total liabilities were (Y) 105.8 billion, a decrease of (Y) 24.1 billion compared to the previous fiscal year, primarily due to a decrease of (Y) 29.9 billion in corporate bonds upon conversion to shares, offset by an increase of (Y) 4.4 billion in income tax payables. Total equity was (Y) 198.7 billion. Ratio of equity attributable to owners of the parent was 65.2%, an increase of 16.2 percentage points from March 31, 2018, primarily due to a decrease of (Y) 70.0 billion in treasury shares upon conversion of corporate bonds.