Financial Review

Consolidated Financial Results of FY2023 Q1 (April 1, 2023 through June 30, 2023)

Overview of Business Results

July 26, 2023(in billion yen)
  Three months ended June 30, 2022 Three months ended June 30, 2023 As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 135.9 101.3 (25.5%)
Operating income 44.8 14.3 (68.1%)
Income before income taxes 48.4 13.0 (73.2%)
Net income 36.5 9.2 (74.8%)

During Advantest's three-month period ended June 30, 2023, the global economy saw normalization of activities compared with the same period last year, supported by policies such as "living with COVID-19." However, prolonged inflation and interest rate hikes in the West, which has continued since the previous fiscal year, heightened fears of recession.

In this uncertain global economic situation, due to a slow down in investments in data centers in addition to declining demand for chips 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 some semiconductors, such as those used in automotive and industrial equipment, were firm, many semiconductor manufacturers implemented inventory adjustments and cut back on CapEx, resulting in an overall contraction of the semiconductor market.

In Advantest's semiconductor test equipment business, investment by customers which continued over the past three years has resulted in excess capacity in some of our customers' supply chains. In addition, the semiconductor market itself has weakened, resulting in a significant drop in demand for our products year-on-year.

As a result of the above, net sales were (Y) 101.3 billion (25.5% decrease in comparison to the corresponding period of the previous fiscal year). Due to a decline in sales and a lower sales mix of higher margin products, operating income was (Y) 14.3 billion (68.1% decrease in comparison to the corresponding period of the previous fiscal year), income before income taxes was (Y) 13.0 billion (73.2% decrease in comparison to the corresponding period of the previous fiscal year) and net income was (Y) 9.2 billion (74.8% decrease in comparison to the corresponding period of the previous fiscal year). Average currency exchange rates in the period were 1 USD to 135 JPY (124 JPY in the corresponding period of the previous fiscal year), and 1 EUR to 146 JPY (134 JPY in the corresponding period of the previous fiscal year). The percentage of net sales to overseas customers was 95.8% (97.3% in the corresponding period of the previous fiscal year).

Semiconductor and Component Test System Segment

(in billion yen)
  Three months ended June 30, 2022 Three months ended June 30, 2023 As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 96.1 70.5 (26.6%)
Segment income (loss) 40.7 18.3 (55.0%)

In this segment, sales of SoC semiconductor test equipment saw a decline for advanced process products including application processors, which are key components in smartphones, against the backdrop of stagnant smartphone market conditions. Sales of memory semiconductor test equipment also fell as the memory semiconductor market deteriorated due to factors such as a slowdown in server investment and sluggish sales volumes in PCs and smartphones. Profitability in this segment also declined as a result of lower sales as well as due to a deteriorating product mix.

Mechatronics System Segment

(in billion yen)
  Three months ended June 30, 2022 Three months ended June 30, 2023 As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 15.4 8.5 (44.6%)
Segment income (loss) 4.6 0.0 (99.9%)

In this segment, sales of device interface products and test handlers decreased due to deterioration of 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)
  Three months ended June 30, 2022 Three months ended June 30, 2023 As compared to the corresponding period of the previous fiscal year increase (decrease)
Net sales 24.5 22.2 (9.4%)
Segment income (loss) 3.9 (0.6)

In this segment, maintenance services sales increased as Advantest's installed base grew. However, in our system-level test (SLT) business, which currently has high sales exposure to a limited number of customers, sales were weak due to the impact of declining demand for consumer electronics. Moreover, Advantest's ongoing investments in reinforcing SLT production and R&D capabilities in anticipation of mid/long-term business growth, which led costs to increase, caused profit in this segment to significantly decline year-on-year.

Overview of Financial Condition

Total assets at June 30, 2023 amounted to (Y) 607.7 billion, an increase of (Y) 7.5 billion compared to March 31, 2023, primarily due to increases of (Y) 21.1 billion in inventories, (Y) 11.1 billion in property, plant and equipment, and (Y) 10.2 billion in goodwill and intangible assets, offset by a decrease of (Y) 36.1 billion in trade and other receivables. The amount of total liabilities was (Y) 224.1 billion, a decrease of (Y) 7.5 billion compared to March 31, 2023, primarily due to decreases of (Y) 19.2 billion in income taxes payable and (Y) 17.3 billion in trade and other payables, offset by an increase of (Y) 21.1 billion in borrowings. Total equity was (Y) 383.6 billion. Ratio of equity attributable to owners of the parent was 63.1%, an increase of 1.7 percentage points from March 31, 2023.