Infineon Q1 Results in line with Expectations, Cost Savings taking Effect
Infineon Technologies AG today reported results for the first quarter of the 2013 fiscal year, ended December 31, 2012: Group revenue totaled €851 million, 13 percent down on the €982 million recorded in the previous quarter. This performance was in line with expectations.
Despite a negative impact of €6 million arising in connection with the euro/US dollar exchange rate, the scale of the decrease was in line with expectations. The measures aimed at stabilizing the margin announced in November in conjunction with the publication of the fourth quarter and 2012 fiscal year results are taking effect.
Income from continuing operations in the first quarter of the 2013 fiscal year amounted to €26 million, compared with €129 million recorded in the final quarter of the previous fiscal year. The first quarter loss from discontinued operations was negative €7 million, marginally down from the positive €9 million reported in the fourth quarter. Overall, net income fell from €138 million in the fourth quarter to €19 million in the first quarter of the current fiscal year. Earnings per share declined quarter-on-quarter from €0.13 to €0.02 (basic and diluted).
Investments — which the Company defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized research and development assets — amounted to €88 million in the first quarter of the 2013 fiscal year, compared to investments of €246 million one quarter earlier. The depreciation and amortization expense increased marginally to €116 million, compared to a fourth-quarter expense of €115 million.
Free cash flow from continuing operations deteriorated from positive €47 million in the previous quarter to negative €128 million in the first quarter. The principal reasons for the first quarter's negative free cash flow were the reduction in net income, significantly lower trade payables due to reduced investment levels and a cash-relevant decrease in current provisions.
Infineon repurchased 6 million of its own shares during the first quarter of the 2013 fiscal year for a total of €38 million with put options at an average exercise price of €6.29 per share. The effective price paid per share, net of all premiums for options exercised or expired during the quarter, was €5.74.
These two factors — negative free cash flow and the repurchase of own shares via put options — resulted in a reduction in cash levels over the course of the quarter under report, with the gross cash position down from €2.235 billion at the end of September 2012 to €2.081 billion at December 31, 2012 and the net cash position down from €1.940 billion to €1.768 billion over the same period.
Automotive segment revenue amounted to €377 million in the first quarter of the 2013 fiscal year, down from €416 million in the previous quarter. This 9 percent decrease was due to adjustments in stocking levels in the automotive supply chain towards the end of the calendar year. Lower revenue caused the Segment Result to drop to €20 million, giving a Segment Result Margin of 5.3 percent. The corresponding figures for the preceding quarter had been €47 million and 11.3 percent respectively.
Industrial Power Control segment revenue fell quarter-on-quarter by 24 percent from €181 million to €138 million, reflecting generally weak demand across all markets and particularly cautious buying by distributors in Asia. Lower first-quarter revenue gave rise to a negative Segment Result of €5 million and a negative Segment Result Margin of 3.6 percent, compared to positive figures of €26 million and 14.4 percent in the previous quarter.
Power Management and Multimarket segment revenue during the first quarter of the 2013 fiscal year totaled €222 million, 10 percent down on the €247 million recorded in the previous quarter. Sales of products for applications such as game consoles and computers, as well as sales of power supplies for televisions, were weak during the first quarter due to seasonal factors. Business with smartphone and cellular network infrastructure related products developed positively, but was unable to make up for the weaker performance in other product areas. Segment Result fell from €37 million to €22 million due to declining revenue, causing the Segment Result Margin to decline from 15.0 percent to 9.9 percent.
The Chip Card and Security segment generated revenue of €108 million in the first quarter of the 2013 fiscal year, down 14 percent from the €126 million reported one quarter earlier and reflecting weaker demand for SIM cards and payment cards and in government ID. The Segment Result amounted to €10 million, compared to the previous quarter's €18 million, bringing the Segment Result Margin down from 14.3 percent to 9.3 percent.
