Despite Early Challenges Infineon Anticipates Profitable Growth in 2014
Infineon Technologies AG reported revenue for the first quarter of the 2014 fiscal year ended December 31, 2013, totaled €984 million, 7 percent down on the €1,053 million recorded in the fourth quarter of the preceding fiscal year. Turnover was in line with the forecast made at the beginning of the quarter. As a consequence of the lower level of revenue, the Segment Result declined by 22 percent from €148 million in the previous quarter to €116 million in the first quarter of the 2014 fiscal year. The corresponding Segment Result Margin decreased from 14.1 percent to 11.8 percent. However, as a result of earlier-than-anticipated improvements in manufacturing productivity, the Segment Result Margin came in above the originally expected range of between 8 and 10 percent.
Income from continuing operations in the first quarter of the 2014 fiscal year amounted to €85 million, compared with €139 million in the previous quarter. At €2 million, income from discontinued operations was almost unchanged from the €3 million recorded in the fourth quarter of the 2013 fiscal year. Net income for the first quarter of the current fiscal year totaled €87 million, compared with €142 million in the preceding quarter. Earnings per share decreased quarter-on-quarter from €0.13 to €0.08.
“Infineon has made a good start into the new fiscal year. Revenue has developed in line with forecast during the first quarter. Earnings were better than expected, benefitting from the efficiency measures undertaken at our manufacturing facilities", stated Dr. Reinhard Ploss, CEO of Infineon Technologies AG. "Good order intake and positive forecasts for the global economy underpin our outlook: Infineon is poised to profitably grow in 2014."
Major product segments included in the report are, Automotive (ATV), Industrial Power Control (IPC), Power Management and Multimarket (PMM), and Chip Card and Security (CCS). ATV segment revenue amounted to €452 million in the first quarter of the current fiscal year, compared with €455 million in the final quarter of the 2013 fiscal year. Due to the number of public holidays, there is usually a more pronounced decrease in revenue in the three-month period from October to December. Strong demand, however – particularly from German car manufacturers – meant that revenue only declined by 1 percent in the first quarter of the 2014 fiscal year. Segment Result decreased slightly from €57 million in the last quarter to €55 million in the first quarter of the current fiscal year, yielding a first-quarter Segment Result Margin of 12.2 percent, compared with the previous quarter's 12.5 percent.
IPC segment revenue was 9 percent down due to seasonal factors, declining from €197 million in the preceding quarter to €179 million in the first quarter of the current fiscal year. Healthy demand from Asia resulted in stable revenues for traction, major home appliances and wind power applications, but did not compensate for decreases recorded in other application areas. Segment Result declined quarter-on-quarter €33 million to €27 million, giving a Segment Result Margin of 15.1 percent, compared with the previous quarter's 16.8 percent.
PMM segment revenue amounted to €238 million in the first quarter of the 2014 fiscal year. This represented a decrease of 12 percent against the €271 million recorded one quarter earlier and was due to seasonal factors. Weakness in demand for the applications mobile devices, network infrastructure and games consoles was more pronounced. Segment Result declined from €49 million in the fourth quarter of the 2013 fiscal year to €29 million in the first quarter of the current fiscal year, with the corresponding Segment Result Margin decreasing from 18.1 percent to 12.2 percent.
First-quarter CCS segment revenue totaled €108 million, compared with €129 million one quarter earlier. Here too, the decrease of 16 percent was due to seasonally lower demand. Segment Result decreased to €6 million, compared with €12 million in the preceding quarter. The Segment Result Margin in the first quarter of the current year was 5.6 percent, compared with 9.3 percent in the preceding quarter.
Second-quarter revenue is forecast to rise by a mid-single digit percentage, primarily as a result of higher revenue in the ATV and CCS segments. The Segment Result Margin is expected to come in at between 10 and 13 percent. The overall outlook for fiscal 2014 is unchanged For the 2014 fiscal year, based on an assumed exchange rate of the US dollar against the euro of 1.35, Infineon continues to forecast an increase in revenue of between 7 and 11 percent compared to the previous year and a Segment Result Margin of between 11 and 14 percent.
The expected increase in revenue for the IPC segment should be well above the average for the Group. The growth rates forecast for the PMM and CCS segments are forecast to be roughly in line with the expected Group average. The ATV segment is likely to grow at a rate slightly lower than the Group average. Revenue generated by Other Operating Segments has decreased continuously in each of the last two fiscal years and only amounted to €26 million in the 2013 fiscal year. The figure for the 2014 fiscal year is expected to be unchanged or slightly lower.
