Earnings Forecast

October 31, 2023 (¥B)
  FY22 FY23   Change vs. Prior Full-Year Forecast
  Results     1H Results 2H Forecast Full-year Forecast vs. FY22   FY23 Forecast as of July Change
1Q Results 2Q Results Change (%)
Sales(*1) 560.2 101.3 116.2 217.5 252.5 470.0 -90.2 -16.1%   480.0 -10.0
Operating Income 167.7 14.3 21.0 35.3 44.7 80.0 -87.7 -52.3%   105.0 -25.0
Operating Margin 29.9% 14.1% 18.1% 16.2% 17.7% 17.0% -12.9pts   21.9% -4.9pts
Income Before Tax 171.3 13.0 20.3 33.3 45.2 78.5 -92.8 -54.2%   103.5 -25.0
Net Income 130.4 9.2 16.7 25.9 34.1 60.0 -70.4 -54.0%   78.0 -18.0
Net Income Margin 23.3% 9.1% 14.4% 11.9% 13.5% 12.8% -10.5pts   16.3% -3.5pts
R&D Expenses 60.1 14.9 16.5 31.4 32.6 64.0 +3.9 +6.5%   63.0 +1.0
CapEx 25.0 5.6 4.5 10.1 10.9 21.0 -4.0 -16.0%   21.0 -
D&A 21.4 6.0 6.5 12.5 13.5 26.0 +4.6 +21.5%   24.0 +2.0
Exchange Rate(*2) 1 US$ ¥134 ¥135 ¥142 ¥139 ¥145 ¥142 ¥8 Depreciation   ¥135 ¥7 Depreciation
1 Euro ¥140 ¥146 ¥156 ¥151 ¥155 ¥153 ¥13 Depreciation   ¥149 ¥4 Depreciation

(*1): Intersegment transactions have been eliminated from totals
(*2): Our latest forecast for the impact of exchange rate fluctuations on FY23 operating income is plus ¥0.9 billion per 1 yen of JPY depreciation vs USD, and minus ¥0.3 billion per 1 yen of JPY depreciation vs the Euro

Looking at Advantest's market environment going forward, Advantest anticipates that in the mid/long-term, semiconductors will need to have even better functionality and reliability as they rise to the challenge of providing infrastructural support for the worldwide digital transformation and green transformation. Our expectations of mid/long-term growth remain unchanged. Indeed, the emergence of new AI-based applications has accelerated the digital transformation, while growing demand for Net Zero initiatives has increased the importance of semiconductor technology for better energy efficiency. Customers are also aggressively continuing to develop next-generation devices, including advances in miniaturization. Advantest expects demand for semiconductor test equipment, which ensures that semiconductors support our "safe, secure, and comfortable" environment and society, to grow in step with the growth of the semiconductor market.

In the short term, however, the outlook for our business environment remains highly uncertain due to factors such as the expansion of geopolitical risks, rising prices of natural resources and other commodities, concerns about a further slowdown in the Chinese economy, and the risk of sharp exchange rate fluctuations. With regard to demand for end products, recovery appears to be slower than assumed in the earnings forecast announced in July 2023. Therefore, Advantest expects production adjustments at semiconductor manufacturers to continue for the time being. While there are potential signs of an upturn in investment in our products for high-end SoC and memory semiconductors, driven by applications such as generative AI, demand recovery for applications such as smartphones has been lagging, and Advantest expects the decline in our tester demand to be more prolonged than initially expected. Regarding the tightening of restrictions on the export of semiconductor production equipment to China by the United States and its allies, the direct impact on our FY2023 earnings is currently expected to be limited, but Advantest will continue to closely monitor the situation.

Based on this outlook, the progress made for the six-month period ended September 30, 2023, and foreign exchange rate conditions, Advantest has lowered full-year consolidated sales forecast for FY2023 to (Y) 470.0 billion, down (Y) 10.0 billion from the (Y) 480.0 billion forecast announced in July 2023. Due to a decrease in the sales composition ratio of high margin products and an increase in procurement costs for parts and materials, profit forecast is also lowered from (Y) 105.0 billion to (Y) 80.0 billion for operating income, from (Y) 103.5 billion to (Y) 78.5 billion for income before income taxes, from (Y) 78.0 billion to (Y) 60.0 billion for net income, respectively. This forecast is based on exchange rate assumptions of 1 USD to 145 JPY and 1 EUR to 155 JPY for the second half of the current consolidated fiscal year.

As mentioned above, our business environment remains uncertain, not least due to uncertainty in the global economy. Advantest will pay close attention to changes in the external environment and respond quickly with measures that may include further cost controls, as necessary.