Structural Growth Drives Strong Start for Infineon in FY17

February 05, 2017 by Jeff Shepard

Infineon Technologies AG reported results for the first quarter of the 2017 fiscal year (period ended December 31, 2016). Compared with the preceding three-month period Infineon Group revenue fell by 2 percent from €1,675 million to €1,645 million in the first quarter of the 2017 fiscal year. Whereas revenue in the Power Management & Multimarket (PMM) and Industrial Power Control (IPC) segments decreased due to seasonal factors, revenue generated by the Automotive (ATV) segment continued to rise. Revenue reported by the Chip Card & Security (CCS) segment was unchanged compared with the previous quarter.

The first-quarter gross margin finished at 36.0 percent, compared with 36.3 percent three months earlier. The first-quarter figures included acquisition-related depreciation and amortization as well as other expenses attributable to the International Rectifier acquisition totaling €25 million. The adjusted gross margin came in at 37.6 percent, slightly down from 37.7 percent for the preceding three-month period.

“We had a good start into the new fiscal year,” stated Dr. Reinhard Ploss, CEO of Infineon. “In the first quarter revenue and earnings were better than expected, driven in particular by strong demand for our components for automotive electronics and MOSFET power transistors. We expect to achieve further growth in our markets during the coming months and, based on the long-term trends, also remain optimistic about the future. We confirm our forecast for the current fiscal year: higher revenue, earnings and margin.”

Operating income fell quarter-on-quarter from €229 million to €184 million. Income from continuing operations totaled €165 million, compared with €228 million one quarter earlier. The loss from discontinued operations amounted to €4 million, compared with the previous quarter’s loss of €3 million. Net income decreased from €225 million to €161 million, whereby the fourth quarter of the 2016 fiscal year included a tax income of €15 million and the first quarter of the current fiscal year a tax expense of €2 million. Earnings per share for the first quarter amounted to €0.14, down from €0.20 one quarter earlier (in each case basic and diluted).

In the second quarter of the 2017 fiscal year, Infineon expects a quarter-on-quarter revenue increase of 5 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 revenue guidance, the Segment Result Margin is expected to come in at 15 percent.

Based on an assumed exchange rate of US$1.10 to the euro, Infineon continues to forecast revenue growth for the 2017 fiscal year of around 6 percent, plus or minus 2 percentage points, and a Segment Result Margin of 16 percent at the mid-point of revenue guidance. The ATV segment is expected to grow at a substantially faster rate than the Group average. Growth in the IPC segment is forecast to be roughly in line with or slightly higher than the Group average. The PMM and CCS segments are both expected to report growth rates below the Group average.