TOKYO, Japan ― Renesas Electronics Corporation (TSE: 6723), a premier supplier of advanced semiconductor solutions, today announced the consolidated financial forecasts for the three months ending June 30, 2020 (April 1, 2020 to June 30, 2020, “second quarter of 2020”) and the six months ending June 30, 2020 (January 1, 2020 to June 30, 2020, “first half of 2020”) which were undetermined at the time of the financial results for the three months ended March 31, 2020 (January 1, 2020 to March 31, 2020, “first quarter of 2020”), announced on April 27, 2020.
1. Consolidated forecasts for the three months ending March 31, 2020
Forecasts for the second quarter and the first half of 2020 (Non-GAAP)*1*2
| (Million yen) | Non-GAAP Revenue | Non-GAAP Gross Margin | Non-GAAP Operating Margin |
|---|---|---|---|
| Original forecasts | --- | --- | --- |
| Second quarter of 2020 as of May 29, 2020 (April 1, 2020 to June 30, 2020) | 152,500 to 160,500 | 46.5% | 14.0% |
| First half of 2020 as of May 29, 2020 (January 1, 2020 to June 30, 2020) | 331,243 to 339,243 | 46.9% | 16.6% |
| Increase (decrease) | --- | --- | --- |
| Percent change | --- | --- | --- |
| Reference: Corresponding period of the previous year (April 1, 2019 to June 30, 2019) | 192,625 | 43.6% | 14.1% |
| Reference: Corresponding period of the previous year (January 1, 2019 to June 30, 2019) | 342,884 | 41.2% | 10.0% |
(Note1) Non-GAAP figures are calculated by adjusting or removing non-recurring items and other adjustments from GAAP (IFRS based) figures following a certain set of rules. The Group believes non-GAAP measures provide useful information in understanding and evaluating the Group’s constant business results, and therefore results are provided in non-GAAP base. This adjustment and exclusion include the amortization of intangible assets recognized from acquisitions, other PPA (purchase price allocation) adjustments and costs relating to acquisitions, stock-based compensation, as well as other non-recurring expenses and income the Group believes to be applicable.
(Note2) Following the acquisition of Integrated Device Technology, Inc. (hereinafter “IDT”) and the absorption type merger of IDT with Renesas Electronics America Inc., since January 1, 2020, the Group has begun the integration of business processes and IT systems, etc. as part of the “One Renesas” promotion. With these processes as a momentum, expense classifications have been revised in order to appropriately display the Group’s financial status and business performance. Changes in classifications have been applied retroactively; therefore, the consolidated financial results of the year ended December 31, 2019 have been reclassified.
The consolidated forecasts for the second quarter of 2020 are calculated at the rate of 108 yen per USD and 118 yen per Euro, and the consolidated forecasts for the first half of 2020 are calculated at a rate of 109 yen per USD and 119 yen per Euro.
2. Background to the timing of the announcement of the consolidated forecasts for the second quarter and the first half of 2020
Due to the uncertainty of impacts from the worldwide COVID-19 pandemic to Renesas’ business, it was difficult to make a reasonable calculation of the financial forecasts and therefore the consolidated financial forecasts for the second quarter of 2020 were undetermined. However, based on the information available at this time, the Group estimated the possible impacts to its business and were able to formulate forecasts, therefore making the announcement today.
As for Renesas Group’s back-end factories located outside Japan listed as a downside risk to the revenue of the second quarter of 2020 announced at the time of the financial results of the first quarter of 2020, all factories are currently under normal operation and no impact is expected to the revenue of the second quarter of 2020. In regard to demands, some effects from the weakening demand have begun to surface and expected impacts have been calculated into the consolidated forecasts for the second quarter of 2020.
The financial forecasts for the second quarter and first half of 2020 are based on the information the Group has available at this current time and includes risks and uncertainties. Therefore, the actual results may differ from the projected results forecast due to changes in several factors. The Group will make an announcement once it confirms the need to make updates to the forecasts following changes in circumstances surrounding COVID-19.
[Reference]
Comparison of forecasts for the second quarter of 2020 and the first half of 2020 against the previous quarter and the corresponding period of the previous year (Non-GAAP)*3
| (B yen) | FY2019/12 | FY2020/12 | ||||||
|---|---|---|---|---|---|---|---|---|
| Second quarter of 2019 (Apr –Jun) Actual | First half of 2019 (Jan – Jun) Actual | First quarter of 2020 (Jan – Mar) Actual | Second quarter of 2020 (Apr – Jun) Forecast | YoY | QoQ | First half of 2020 (Jan – Jun) Forecast | YoY | |
| Revenue | 192.6 | 342.9 | 178.7 | 152.5 to 160.5 | -20.8% to -16.7% | -14.7% to -10.2% | 331.2 to 339.2 | -3.4% to -1.1% |
| Gross Margin*4 | 43.6% | 41.2% | 47.3% | 46.5% | +2.9pts | -0.8pt | 46.9% | +5.7pts |
| Operating Margin*4 | 14.1% | 10.0% | 18.8% | 14.0% | -0.1pt | -4.8pts | 16.6% | +6.6pts |
| 1 US$ = | 111 | 111 | 110 | 108 | 3 yen appreciation | 2 yen appreciation | 109 | 2 yen appreciation |
| 1 EUR = | 125 | 125 | 121 | 118 | 7 yen appreciation | 3 yen appreciation | 119 | 6 yen appreciation |
(Note 3): Non-GAAP: same as the note 1 and note 2 on page 1
(Note 4): Figures represent the midpoint in the sales revenue forecast range.
Forward-Looking Statements
The statements in this press release with respect to the plans, strategies and financial outlook of Renesas Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. We caution you in advance that actual results may differ materially from such forward-looking statements due to several important factors including, but not limited to, general economic conditions in our markets, which are primarily Japan, North America, Asia, and Europe; demand for, and competitive pricing pressure on, products and services in the marketplace; ability to continue to win acceptance of products and services in these highly competitive markets; and fluctuations in currency exchange rates, particularly between the yen and the U.S. dollar. Among other factors, downturn of the world economy; deteriorating financial conditions in world markets, or deterioration in domestic and overseas stock markets, may cause actual results to differ from the projected results forecast.
*以上新闻稿中所发布的信息，包含但不限于产品价格、规格，为截止到发稿时的信息。日后若发生变更，恕不另行通知。敬请谅解。
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*以上新闻稿中所发布的信息，包含但不限于产品价格、规格，为截止到发稿时的信息。日后若发生变更，恕不另行通知。敬请谅解。