Despite Market Headwinds, Infineon on Track for Growth in 2019 Fiscal Year
Infineon reported the financial results for Q1 of fiscal 2019, which ended December 31, 2018. The company closed the December quarter with revenue down as forecast and earnings slightly higher than expected. During the first quarter of fiscal 2019, the company posted revenue €1,970 million, a seasonal quarter-on-quarter decrease of 4% from the €2,047 million in the fourth quarter of the preceding fiscal year.
Revenue was down slightly in the Automotive (ATV) and Industrial Power Control (IPC) segments. Compared to the Group average, the decline was somewhat more significant in the Power Management & Multimarket (PMM) segment and noticeably more pronounced in the Digital Security Solutions (DSS) segment.
Based on an assumed exchange rate of US$ 1.15 to the euro, the company posted stable revenue quarter-on-quarter (plus or minus 2 percentage points) and had a Segment Result Margin of 16 percent at mid-point of revenue guidance.
Forecast for FY 2019:
Based on the developments in the first two quarters, revenue growth is now predicted to be at the lower end of the forecast range, which represents year-on-year growth of 9 percent at an assumed exchange rate of US$ 1.15 to the Euro.
"So far we have been able to master the challenges of an increasingly difficult business environment well," stated Dr. Reinhard Ploss, CEO of Infineon. "Despite market headwinds, we expect to be able to grow by about 9 percent in the 2019 fiscal year and gain further market share on the back of healthy structural growth drivers. Our long-term growth prospects remain intact. We will therefore continue to pursue core projects such as the construction of the 300-millimeter cleanroom in Villach, but moderately reduce investments in manufacturing equipment."
With effect from the beginning of 2019 fiscal year, Infineon is applying IFRS 15 (Revenue from Contracts with Customers) and IFRS 9 (Financial Instruments) using the modified retrospective approach. As a result, prior periods are not adjusted to the new accounting policies.
Outlook for the second quarter of the 2019 fiscal year
Based on an assumed exchange rate of US$ 1.15 to the euro in the second quarter of the 2019 fiscal year, Infineon forecasts that revenue will remain stable quarter-on-quarter (plus or minus 2 percentage points). At the mid-point of revenue guidance, the
Segment Result Margin is expected to be about 16 percent.