Structural growth drives year start for Infineon

2nd February 2017
Revenue and earnings better than expected, driven by strong automotive demand, says CEO

Infineon Technologies has posted its results for Q1 2017 (period ended December 31, 2016), with a revenue of €1.645 billion.

“We had a good start into the new fiscal year,” said Reinhard Ploss, CEO of Infineon. “In the first quarter revenue and earnings were better than expected, driven in particular by strong demand for our components for automotive electronics and MOSFET power transistors. 

"We expect to achieve further growth in our markets during the coming months and, based on the long-term trends, also remain optimistic about the future. We confirm our forecast for the current fiscal year: higher revenue, earnings and margin.” of Group financials for the first quarter of the 2017 fiscal year

Compared with the preceeding three-month period, Infineon Group revenue fell by 2 percent from €1.675 billion to €1.645 billion in the first quarter of the 2017 fiscal year.

Whereas revenue in the Power Management & Multimarket (PMM) and Industrial Power Control (IPC) segments decreased due to seasonal factors, revenue generated by the Automotive (ATV) segment continued to rise. Revenue reported by the Chip Card & Security (CCS) segment was unchanged compared with the previous quarter.

The first-quarter gross margin finished at 36.0 percent, compared with 36.3 percent three months earlier. The first-quarter figures included acquisition-related depreciation and amortisation as well as other expenses attributable to the International Rectifier acquisition totaling €25 million.

The adjusted gross margin came in at 37.6 percent, slightly down from 37.7 percent for the preceding three-month period.  Segment Result was 12 percent lower quarter-on-quarter, decreasing from €280 million to €246 million. 

Segment Result was 12 percent lower quarter-on-quarter, decreasing from €280 million to €246 million. The Segment Result Margin for the first quarter was 15.0 percent, compared with 16.7 percent in the final quarter of the 2016 fiscal year.

The non-segment result was a net loss of €62 million, compared with a net loss of €51 million in the previous quarter. Of the first-quarter figure, €26 million related to the cost of goods sold, €1 million to research and development expenses and €22 million to selling, general and administrative expenses. In addition, other operating income and other operating expenses amounted to a net expense of €13 million.

The non-segment result includes €46 million of depreciation and amortization charges arising in conjunction with the purchase price allocation and other expenses for postmerger integration measures relating to the acquisition of International Rectifier. Operating income fell quarter-on-quarter from €229 million to €184 million. Income from continuing operations totaled €165 million, compared with €228 million one quarter

Outlook for Q2 2017 

In the second quarter of the 2017 fiscal year, Infineon expects a quarter-on-quarter revenue increase of 5 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 revenue guidance, the Segment Result Margin is expected to come in at 15 percent.

Outlook for 2017 fiscal year reaffirmed

Based on an assumed exchange rate of $1.10 to the euro, Infineon continues to forecast revenue growth for the 2017 fiscal year of around 6 percent, plus or minus 2 percentage points, and a Segment Result Margin of 16 percent at the mid-point of revenue guidance. 

The Automotive (ATV) segment is expected to grow at a substantially faster rate than the Group average. Growth in the IPC segment is forecast to be roughly in line with or slightly higher than the Group average. The PMM and CCS segments are both expected to report growth rates below the Group average. 

Investments in property, plant and equipment, intangible assets and capitalised development costs in the region of €950 million are planned for the 2017 fiscal year. The figure includes approximately €35 million for a new office building at Infineon’s headquarters in Neubiberg near Munich.

Excluding investments in the new office building, the ratio for investments as a percentage of revenue (at the mid-point of revenue guidance for the 2017 fiscal year) is forecast at approximately 13 percent. Depreciation and amortisation are expected to be in the region of €830 million.

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