Financial Review

Consolidated Financial Results of FY2020 (April 1, 2020 through March 31, 2021)

Overview of Business Results

April 27, 2021(in billion yen)
  FY2019 FY2020 As compared to the previous fiscal year increase (decrease)
Orders received 287.8 330.6 14.9%
Net sales 275.9 312.8 13.4%
Operating income 58.7 70.7 20.5%
Income before income taxes 58.6 69.6 18.9%
Net income 53.5 69.8 30.4%

During the consolidated fiscal year of 2020, the global economy was severely impacted by the COVID-19 pandemic. Although efforts were made in each country to balance public health and economic activity in order to save the economy, a historic recession set in, and the pace of recovery remains slow.

In Advantest's core semiconductor test equipment business, the mainstreaming of remote work and increased domestic consumption due to COVID-19 restrictions supported firm demand related to data centers and game consoles throughout the year. Automotive and industrial-related test demand continued to stagnate from early spring under the influence of lockdowns intended to contain COVID-19, and other restrictions on movement, but market conditions improved from the second half of the fiscal year due to the recovery of final-product manufacturing. Meanwhile, in smartphone-related markets, the intensifying friction between the United States and China triggered a significant adjustment in test equipment demand, but Advantest compensated for this impact by striving to capture the demand for new test equipment that has arisen as a result of competition in handset performance. Advantest also endeavored to boost sales of integrated test solutions such as mechatronics business products and system level test business products, amid further advances in semiconductor performance and reliability assurance needs.

As a result, Advantest achieved record-high orders, sales, and net income. This enabled us to achieve all the management targets set under our first medium-term management plan, which covered the three years starting from FY2018. Orders received for the current consolidated fiscal year were (Y) 330.6 billion (14.9% increase in comparison to the previous fiscal year), and sales were (Y) 312.8 billion (13.4% increase in comparison to the previous fiscal year). In terms of profit, although our sales composition ratio saw a decline in products with a high gross profit margin, a one-time profit of approximately (Y) 8.1 billion was recorded, consisting of gains on business transfers and gains due to the transfer to one defined benefit corporate pension plan at Advantest’s German subsidiary. As a result, operating income was (Y) 70.7 billion (20.5% increase in comparison to the previous fiscal year) and income before income taxes was (Y) 69.6 billion (18.9% increase in comparison to the previous fiscal year). In addition, with the inclusion of deferred tax assets likely to be realized during a certain fixed period in the future that were recorded in the fourth quarter, net income was (Y) 69.8 billion (30.4% increase in comparison to the previous fiscal year). Average currency exchange rates in the current consolidated fiscal year were 1 USD to 106 JPY (109 JPY in the previous fiscal year) and 1 EUR to 123 JPY (121 JPY in the previous fiscal year). The percentage of net sales to overseas customers was 95.5% (94.6% in the previous fiscal year).

Semiconductor and Component Test System Segment

(in billion yen)
  FY2019 FY2020 As compared to the previous fiscal year increase (decrease)
Orders received 192.6 227.2 18.0%
Net sales 197.2 207.2 5.1%
Segment income 65.2 61.6 (5.4%)

In this segment, the mainstreaming of remote work helped to support a strong demand environment for SoC semiconductor test equipment for HPC (High Performance Computing) devices. In addition, the transition to higher functionality for display driver ICs and image sensors used in new smartphones with improved performance has greatly increased test demand for these types of devices, and contributed to an increase in orders. The movement to secure inventories of automotive and other types of semiconductors, which gathered momentum toward the end of the fiscal year, also boosted orders for SoC semiconductor test equipment. On the other hand, due to the exacerbation of friction between the United States and China, Advantest experienced a significant demand adjustment related to the business of some smartphone-related SoC semiconductor customers over last summer, which somewhat depressed sales and profit in this segment. Sales of test equipment for memory semiconductors remained high amidst growing test demand for memory semiconductors for data servers and game consoles.

Mechatronics System Segment

(in billion yen)
  FY2019 FY2020 As compared to the previous fiscal year increase (decrease)
Orders received 36.2 42.1 16.1%
Net sales 36.3 40.0 10.2%
Segment income (0.5) 5.0 -

In this segment, sales of device and interface products that closely track demand for test equipment for memory semiconductors grew in step with memory test equipment sales. In addition, a one-time gain on the transfer of Advantest's probe card business of approximately (Y) 2.5 billion was recorded as part of this segment's profit.

Services, Support and Others Segment

(in billion yen)
  FY2019 FY2020 As compared to the previous fiscal year increase (decrease)
Orders received 59.1 62.5 5.8%
Net sales 42.5 66.8 57.0%
Segment income 3.0 10.4 3.5 times

In this segment, demand for Advantest's services remained strong against the backdrop of the robust semiconductor market. In addition, Advantest's acquisition of Essai, Inc., in January 2020 boosted segment sales due to the effect of consolidation. Furthermore, market needs for semiconductors with better performance and reliability raised demand for various system level test equipment, including Essai's products, contributing to a significant increase in sales.

Overview of Financial Condition for FY2020

Total assets at the end of FY2020 were (Y) 422.6 billion, an increase of (Y) 66.9 billion compared to the previous fiscal year, primarily due to an increase of (Y) 21.5 billion, (Y) 10.6 billion, (Y) 9.9 billion, (Y) 7.3 billion and (Y) 6.5 billion in cash and cash equivalents, trade and other receivables, deferred tax assets, other financial assets and property, plant and equipment, respectively.
The total liabilities were (Y) 142.3 billion, an increase of (Y) 17.9 billion compared to the previous fiscal year, primarily due to the increase of (Y) 11.9 billion in trade and other payables and (Y) 4.0 billion in other current liabilities. The increase in other financial assets derives from acquisition of invested securities, and the increase in other current liabilities derives from an increase in advance receipt. Total equity was (Y) 280.4 billion. Ratio of equity attributable to owners of the parent was 66.3%, an increase of 1.2 percentage points from March 31, 2020.