Infineon reports Solid Start for 2016 Fiscal Year

Infineon Technologies AG reported results for the first quarter of the 2016 fiscal year (period ended December 31, 2015). "Our business performed better than expected in the past quarter. Infineon's broad diversification in terms of customers, markets and regions is paying off," stated Dr. Reinhard Ploss, CEO of Infineon Technologies AG. "We are doing particularly well in the automotive business, where Infineon's leading expertise is prevailing. Our solutions for driver assistance systems continue to generate growth. Electromobility is gaining momentum as well."

At €1,556 million, the Infineon Group's revenue totaled €42 million or 3 percent lower in the first quarter of the current fiscal year due to seasonal factors, down from €1,598 million in the fourth quarter of the 2015 fiscal year. The Industrial Power Control (IPC), Power Management & Multimarket (PMM) and Chip Card & Security (CCS) segments all reported decreases, whereas the Automotive segment (ATV) recorded revenue essentially flat compared to the previous quarter.

The revenue decrease caused the gross margin to decline from 39.0 percent to 35.9 percent quarter-on-quarter. Acquisition-related depreciation, amortization and other with the acquisition of International Rectifier related expenses totaling €27 million were recorded in the first quarter.

The first-quarter Segment Result amounted to €220 million, 23 percent down on the €286 million reported for the preceding three-month period. The Segment Result Margin came in at 14.1 percent, in line with guidance, compared with the previous quarter's 17.9 percent. The decreases in Segment Result and Segment Result Margin were primarily attributable to the seasonal drop in revenue, a less favorable product mix and currency effects on the cost side.

The negative non-segment result continued to improve, from negative €83 million in the fourth quarter 2015 to negative €54 million in the first quarter of the current fiscal year. Of the first-quarter figure, €29 million related to cost of goods sold, €4 million to research and development expenses and €26 million to selling, general and administrative expenses. Other operating income respectively expenses net amounted to positive €5 million. The non-segment result includes a balanced amount of €45 million of depreciation and amortization arising in conjunction with the purchase price allocation and other expenses related to the acquisition of International Rectifier.

Operating income decreased from €203 million in the fourth quarter to €166 million in the first quarter of the 2016 fiscal year. Income from continuing operations fell to €152 million, partly reflecting the fact that the fourth quarter figure of €322 million had included a net income tax benefit of €131 million. Income from discontinued operations amounted to €0 million, compared to €3 million in the preceding quarter. Net income was €152 million, compared with €325 million in the fourth quarter.

Earnings per share (basic and diluted) fell from €0.29 to €0.14 quarter-on-quarter. Adjusted earnings per share (diluted) increased from €0.16 in the fourth quarter of the 2015 fiscal year to €0.17 in the first quarter of the current year. For the purpose of calculating adjusted earnings per share (diluted), a number of items were eliminated, most notably acquisition-related depreciation/amortization and other expenses (net of tax) as well as reversals of valuation allowances on deferred tax assets.

Investments – which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized development costs – totaled €167 million, compared to €279 million in the fourth quarter of the previous fiscal year. At €211 million, depreciation and amortization remained unchanged compared to the fourth quarter.

Free cash flow from continuing operations declined to break-even for the first quarter, in line with forecast. The equivalent figure for the previous three-month period was €177 million. Net cash provided by operating activities from continuing operations amounted to €175 million, compared to the previous quarter's €429 million.

The gross cash position stood at €1,994 million at December 31, 2015, slightly down on the €2,013 million reported at the end of the fourth quarter. Similarly, the net cash position was also lower, falling from €220 million at September 30, 2015 to €204 million at December 31, 2015.

In the second quarter of the 2016 fiscal year, Infineon expects a quarter-on-quarter revenue increase of 3 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 the revenue range, the Segment Result Margin is expected to come in at approximately 13 percent.

Based on an assumed average exchange rate of US$1.10 to the euro, Infineon expects an unchanged year-on-year revenue growth of around 13 percent (plus or minus 2 percentage points) for the 2016 fiscal year and a Segment Result Margin of 16 percent at the mid-point of the range for the forecast revenue growth.

The Power Management & Multimarket segment is expected to grow faster than the Group average. Revenue growth in the Industrial Power Control segment is forecast to be roughly in line with the Group average. The Automotive and Chip Card & Security segments are both expected to report growth below the Group average. The forecast includes the financial figures of International Rectifier for the full fiscal year. The results of operations for the 2015 fiscal year included figures for International Rectifier with effect from the closing of the acquisition on January 13, 2015.