Infineon Technologies AG: ABOVE-AVERAGE SEASONAL REVENUE GROWTH AND HIGHER EARNINGS DRIVEN BY STRONG DEMAND IN AUTOMOTIVE, INDUSTRIAL AND POWER SUPPLY
- Q2 FY 2017: REVENUE EUR1,767 MILLION; SEGMENT RESULT EUR296 MILLION; SEGMENT RESULT MARGIN 16.8 PERCENT; EARNINGS PER SHARE EUR0.18 (BASIC AND DILUTED); ADJUSTED EARNINGS PER SHARE EUR0.21 (DILUTED); GROSS MARGIN 36.5 PERCENT, ADJUSTED GROSS MARGIN 38.0 PERCENT
- OUTLOOK FOR Q3 FY 2017: QUARTER-ON-QUARTER REVENUE GROWTH OF 3 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS), WITH SEGMENT RESULT MARGIN OF 17.5 PERCENT AT MID-POINT OF REVENUE GUIDANCE
- OUTLOOK FOR FY 2017: BASED ON AN ASSUMED EXCHANGE RATE OF US$ 1.10 TO THE EURO, YEAR-ON-YEAR REVENUE GROWTH OF AROUND 8 TO 11 PERCENT, WITH SEGMENT RESULT MARGIN OF 17 PERCENT AT MID-POINT OF REVENUE GUIDANCE
Neubiberg, Germany, 4 May 2017 - Infineon Technologies AG today reported results for the second quarter of its 2017 fiscal year (period ended 31 March 2017).
"The favorable market development we saw in the first quarter of the fiscal year has continued into the second three-month period. Current order situation gives us good reason for optimism and we have raised our forecast for the full year," said Dr. Reinhard Ploss, CEO of Infineon. "Apart from a continuation of our outstanding performance in the automotive sector, demand for solutions for industrial applications, power supplies and homeappliances is also gathering pace. We are particularly pleased with the positive customer feedback on our silicon carbide MOSFET. This is a clear sign that we are pursuing the right strategy concerning compound semiconductors."
REVIEW OF GROUP FINANCIALS FOR THE SECOND QUARTER OF THE 2017 FISCAL YEAR In the second quarter of the 2017 fiscal year, revenue grew by 7 percent from EUR1,645 million to EUR1,767 million quarter-on-quarter. The Automotive (ATV), Industrial Power Control (IPC) and Power Management & Multimarket (PMM) segments all contributed to revenue growth, whereas revenue reported by the Chip Card & Security segment (CCS) was down slightly.
Euro in millions Q2 FY17 Q1 FY17 +/- in % Revenue 1,767 1,645 7 Segment Result 296 246 20 Segment Result Margin 16.8% 15.0% Income (loss) from continuing operations 198 165 20 Income (loss) from discontinued operations, net of income taxes 1 (4) +++ Net income 199 161 24 in Euro Basic earnings (loss) per share from continuing operations1 0.18 0.15 20 Basic earnings (loss) per share from discontinued operations1 - (0.01) +++ Basic earnings per share1 0.18 0.14 29 Diluted earnings (loss) per share from continuing operations1 0.18 0.15 20 Diluted earnings (loss) per share from discontinued operations1 - (0.01) +++ Diluted earnings per share1 0.18 0.14 29 Adjusted earnings per share diluted2 0.21 0.17 24 Gross margin 36.5% 36.0% Adjusted gross margin2 38.0% 37.6%
1 The calculation for earnings per share and for adjusted earnings per share is based on unrounded figures.
2 The reconciliation of net income to adjusted net income and adjusted earnings per share as well as of cost of goods sold to adjusted cost of goods sold and adjusted gross margin can be found in the quarterly information at www.infineon.com.
The second-quarter gross margin was 36.5 percent, compared with 36.0 percent in the previous quarter. These figures include acquisition-related depreciation and amortization as well as other expenses attributable to the International Rectifier acquisition totaling EUR25 million. The adjusted gross margin came in at 38.0 percent, up from 37.6 percent one quarter earlier.
Segment Result increased by 20 percent from EUR246 million to EUR296 million quarter-on-quarter. The Segment Result Margin improved to 16.8 percent, compared with 15.0 percent in the previous quarter.
The non-segment result was a net loss of EUR67 million, compared with a net loss of EUR62 million in the previous quarter. Of the second-quarter figure, EUR26 million related to the cost of goods sold, EUR24 million to selling, general and administrative expenses and EUR0 million to research and development expenses. In addition, other operating income and other operating expenses amounted to a net expense of EUR17 million, which includes primarily expenses arising in conjunction with the termination of the planned acquisition of Wolfspeed.
The non-segment result includes EUR43 million of depreciation and amortization charges arising in conjunction with the purchase price allocation and other expenses for post-merger integration measures relating to the acquisition of International Rectifier.
Operating income in the second quarter of the current fiscal year increased to EUR229 million, compared with EUR184 million in the previous quarter. Income from continuing operations improved from EUR165 million to EUR198 million quarter-on-quarter. Income from discontinued operations amounted to EUR1 million, compared with a loss of EUR4 million in the preceding quarter. Net income for the three-month period improved from EUR161 million to EUR199 million. The amount reported for the second quarter is stated after an income tax expense of EUR20 million, compared with a tax expense of EUR2 million in the first quarter.
Earnings per share for the second quarter of the current fiscal year increased to EUR0.18, up from EUR0.14 one quarter earlier (basic and diluted). Adjusted earnings per share3 (diluted) amounted to EUR0.21, compared with EUR0.17 in the previous quarter. For the purpose of calculating adjusted earnings per share (diluted), a number of items are eliminated, most notably acquisition-related depreciation/amortization and other expenses (net of tax) as well as valuation allowances on deferred tax assets.
Investments - which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized development assets - totaled EUR219 million in the second quarter, compared with EUR204 million in the first quarter. The depreciation and amortization expense increased slightly to EUR205 million, compared to a first-quarter expense of EUR200 million.
Free cash flow from continuing operations in the second quarter improved to a positive amount of EUR82 million. The corresponding figure for the previous quarter was a negative amount of EUR39 million. Free cash flow for the first quarter includes a net cash outflow of EUR112 million arising in conjunction with the acquisition of 93 percent of the shares of MoTo Objekt Campeon GmbH & Co. KG. Net cash provided by operating activities from continuing operations improved to EUR300 million, compared with the previous quarter's EUR282 million.
As a result of the dividend payment in February 2017 amounting to EUR248 million, the gross cash position decreased from EUR2,209 million at the end of the first quarter to EUR2,049 million at 31 March 2017. The net cash position fell to EUR32 million, compared with EUR166 million at the end of the first quarter.
Provisions relating to Qimonda decreased slightly from EUR31 million at 31 December 2016 to EUR27 million at 31 March 2017. The provisions were originally recognized for litigation costs in conjunction with claims made by the Qimonda insolvency administrator and for residual liabilities related to Qimonda Dresden GmbH & Co. OHG.
Outlook for the third quarter of the 2017 fiscal year In the third quarter of the 2017 fiscal year, Infineon expects quarter-on-quarter revenue growth of 3 percent (plus or minus 2 percentage points). This forecast is based on an assumed exchange rate of US$ 1.10 to the euro. At the mid-point of the revenue guidance, the Segment Result Margin is expected to come in at 17.5 percent.
Outlook for the 2017 fiscal year In line with the ad hoc notification made on 24 March 2017 of an increased outlook for the 2017 fiscal year, Infineon expects year-on-year revenue growth of 8 to 11 percent, with a Segment Result Margin of approximately 17 percent at the mid-point of the revenue guidance. The outlook is based on an assumed EUR/USD exchange rate of 1.10. ATV segment revenue is expected to grow faster than the Group average. Growth in the IPC segment is forecast to be roughly in line with or slightly lower than the Group average. The PMM and CCS segments are both expected to report growth rates below the Group average.
In light of the better than expected development in revenue and orders received, the outlook for investments in property, plant and equipment and intangible assets, including capitalized development costs, has also been raised. It is now forecast that EUR1,050 million will be invested during the 2017 fiscal year. The figure includes approximately EUR35 million for the new office building at Infineon's headquarters in Neubiberg near Munich. Depreciation and amortization is still expected to be in the region of EUR830 million.
Early market acceptance of silicon carbide MOSFET The 1,200-volt silicon carbide MOSFET will soon be ready for its market launch. Infineon already provided samples of the innovative, trench-based architecture to customers. Their feedback was quite positive: customers have already placed their first firm orders, which are expected to translate into revenue still in the course of the current fiscal year. Already in this early stage, customer projects with potential revenue of a low triple-digit million Euro amount over the coming years are planned across all industrial applications. These include solar inverters for plants and rooftop systems, charging stations for electric vehicles, uninterruptible power supplies, air conditioning and discrete factory automation.
Automotive segment increases market share In April, the market research company Strategy Analytics published new estimates for the automotive semiconductor market. According to the analysts, the market for automotive semiconductors expanded by 10.4 percent from US$ 27.4 billion to US$ 30.2 billion in the 2016 calendar year. Automobile production grew by around 4 percent during that year, implying an increase in semiconductor content per vehicle to around 6 percent.
With a market share increase from 10.4 percent in the 2015 calendar year to 10.7 percent in 2016 Infineon cemented its position as number two on the market. In the Automotive power semiconductors sector, the fastest growing of all, Infineon has improved its market position by 0.4 percentage points to 25.6 percent. Infineon recorded its largest gain in the field of sensors, picking up 0.6 percentage points to reach a market share of 12.5 percent in the 2016 calendar year. In microcontrollers, Infineon's market share increased slightly from 8.6 percent to 8.7 percent in 2016.
On a regional basis, Infineon's highest market share gain was 2.2 percentage points in China. The market share increase from 8.7 percent in the 2015 calendar year to 10.9 percent in 2016 has improved Infineon's ranking by one place and it is now also the second-largest supplier on the Chinese market.
3 Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior performance indicator, but rather as additional information to the net income and earnings per share (diluted) determined in accordance with IFRS.
Infineon's segments' performance in the second quarter of the 2017 fiscal year can be found in the quarterly information at www.infineon.com.
All figures in this quarterly information are preliminary and unaudited.
ANALYST AND PRESS TELEPHONE CONFERENCE Infineon will host a telephone conference call for analysts and investors (in English only) on 4 May 2017 at 9:30 am (CEST), 3:30 am (EDT). During the call, the Infineon Management Board will present the Company's results for the second quarter of the 2017 fiscal year. In addition, the Management Board will host a telephone conference with the media at 11:00 am (CEST), 5:00 am (EDT). It can be followed over the Internet in both English and German. Both conferences will also be available live and for download on Infineon's website at www.infineon.com/investor.
The Q2 Investor Presentation is available (in English only) at: http://www.infineon.com/cms/en/corporate/investor/reporting/
INFINEON FINANCIAL CALENDAR (* preliminary)
- 11 May 2017 Deutsche Bank AutoTech Conference, San Francisco
- 22 May 2017 Berenberg European Conference USA, Tarrytown, NY
- 23 - 24 May 2017 JP Morgan TMT Conference, Boston
- 24 May 2017 Equita European Conference, Milan
- 30 May 2017 German Corporate Day by Danske Bank Markets, Copenhagen
- 31 May - 1 Jun 2017 Bernstein Strategic Decision Conference, New York
- 1 Jun 2017 Berenberg TMT Conference, Zurich
- 6 - 7 Jun 2017 BoAML Global Technology Conference, San Francisco
- 13 - 14 Jun 2017 Exane European Conferene, Paris
- 20 Jun 2017 JP Morgan CEO Conference, London
- 21 - 22 Jun 2017 Deutsche Bank German, Swiss & Austrian Conference, Berlin
- 29 Jun 2017 PMM Presentation by Andreas Urschitz, Division President PMM
- 1 Aug 2017* Earnings Release for the Third Quarter of the 2017 Fiscal Year
- 31 Aug 2017 Commerzbank Sector Conference, Frankfurt
- 6 - 7 Sep 2017 Citi Global Technology Conference, New York
- 18 Sep 2017 Berenberg Bank and Goldman Sachs German Corporate Conference, Munich
- 20 Sep 2017 Baader Investment Conference, Munich
- 10 Oct 2017 ATV Presentation by Peter Schiefer, Division President
- 14 Nov 2017* Earnings Release for the Fourth Quarter and the 2017 Fiscal Year
ABOUT INFINEON Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener. Microelectronics from Infineon is the key to a better future. In the 2016 fiscal year (ending 30 September), the Company reported sales of about EUR6.5 billion with some 36,300 employees worldwide. Infineon is listed on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX International Premier (ticker symbol: IFNNY).
D I S C L A I M E R
This press release contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group.
These statements are based on assumptions and projections resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may therefore differ materially from what has been expected.
Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements.
Due to rounding, numbers presented throughout this press release and other reports may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.Contact: Bernd Hops, Media Relations, phone: +49 89 234-24123, fax: +49 89 234-154123
04.05.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.deLanguage: English
Company: Infineon Technologies AG Am Campeon 1-12 85579 Neubiberg
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