Infineon Reports a Challenging FY2019 Ended with a Positive Result

November 12, 2019 by Paul Shepard

Infineon Technologies AG has reported results for the fourth quarter as well as for the full 2019 fiscal year, both ended 30 September 2019, including:

  • Q4 FY 2019: Revenue of €2,062 million; Segment Result of €311 million; Segment Result Margin of 15.1 percent
  • FY 2019: Revenue €8,029 million, up 6 percent year-on-year; Segment Result €1,319 million; Segment Result Margin 16.4 percent

"We have achieved our targets for the fourth quarter, bringing a challenging fiscal year to an end on a good note. Demand was particularly strong for our power semiconductors for renewable energy applications and our sensors for consumer devices," said Dr. Reinhard Ploss, CEO of Infineon.

"We are feeling the effects of weak global auto demand and do not expect any improvement for the time being. The general economic environment remains fraught with macroeconomic and political uncertainty. We do not expect markets to recover before the second half of the fiscal year,” Ploss added.

Group performance in the fourth quarter of the 2019 fiscal year

In the fourth quarter of the 2019 fiscal year, revenue grew by 2 percent from €2,015 million to €2,062 million compared with the previous three-month period. The slightly stronger US dollar compared to the third quarter had a bit of a positive impact on revenue. The main reason for higher Group revenue, however, was the seasonal upturn in the Power Management & Multimarket (PMM) segment. Revenue was also slightly up in the Automotive (ATV) and Industrial Power Control (IPC) segments quarter-on-quarter, whereas the Digital Security Solutions (DSS) segment recorded a slight decrease.

The fourth-quarter gross margin came in at 35.5 percent, compared to 36.5 percent in the preceding three-month period. This includes acquisition-related depreciation and amortization as well as other expenses totaling €17 million, relating to the acquisition of International Rectifier. The adjusted gross margin declined from 37.2 percent to 36.3 percent quarter-on-quarter. The Segment Result for the final quarter of the 2019 fiscal year amounted to €311 million, compared to €317 million in the third quarter. The Segment Result Margin decreased from 15.7 percent to 15.1 percent by comparison.

Outlook for the 2020 fiscal year

Based on an assumed exchange rate of US$1.13 to the euro, Infineon expects revenue growth in the 2020 fiscal year of 5 percent (plus or minus 2 percentage points) and a Segment Result Margin of about 16 percent at the mid-point of the guided revenue range. The assumed EUR/USD exchange rate of 1.13 corresponds to the average actual exchange rate for the 2019 fiscal year. Revenue growth in the Automotive segment is expected to be slightly higher than the Group average.

Power Management & Multimarket segment revenue growth is likely to be in line with the Group average. Growth in the Industrial Power Control segment is forecast to be marginally below the Group average, while Digital Security Solutions segment revenue is expected to remain flat or grow only slightly.

Investments in property, plant and equipment, intangible assets and capitalized development costs are planned at approximately €1.3 billion for the 2020 fiscal year. About one third of this amount will be spent for production buildings and related facilities, as well as office buildings, in order to be ready to fully participate in the next market upturn and benefit from structural growth potentials.

The biggest single project remains the construction of the cleanroom for the new 300-millimeter facility in Villach. The timetable for completing this new cleanroom will be adapted to market developments and we expect start of production towards the end of the 2021 calendar year.