Renesas Electronics Announces Consolidated Forecasts for the Second Quarter and First Half of 2020

TOKYO–(BUSINESS WIRE)–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

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%

(Note 1)

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.

(Note 2)

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.

About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power, and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.

Contacts

Media Contacts
Kyoko Okamoto

Renesas Electronics Corporation

+81 3-6773-3001

pr@renesas.com

Investor Contacts
Taizo Endo

Renesas Electronics Corporation

+81 3-6773-3002

ir@renesas.com