Infineon Technologies AG

Earnings Release • Nov 10, 2003

News Details

Ad-hoc | 10 November 2003 07:31

Infineon Technologies AG english

Infineon reports fourth quarter and fiscal year 2003 results Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Infineon reports fourth quarter and fiscal year 2003 results FOURTH QUARTER 2003 RESULTS (July 1 to September 30, 2003) Infineon Technologies AG, the world’s sixth-largest semiconductor manufacturer, had fourth quarter revenues of Euro 1.76 billion, up 19 percent sequentially and up 37 percent year-on-year. Net income amounted to Euro 49 million, compared to a net loss of Euro 116 million in the previous quarter and a loss of Euro 506 million in the fourth quarter of fiscal year 2002. Basic and diluted earnings per share was Euro 0.07, compared to a loss per share of Euro 0.16 in the previous quarter and a loss per share of Euro 0.72 year-on-year. EBIT earnings were Euro 67 million, compared to a loss of Euro 116 million for the previous quarter and a loss of Euro 295 million for the 2002 fourth quarter. This improvement was primarily achieved by increased productivity, significant volume growth, improving DRAM pricing and a profit from the sale of shares in the Taiwanese company ProMOS. Free cash flow improved significantly to Euro 388 million from Euro 11 million in the previous quarter, reflecting the improved profitability. Since June 2002, the U.S. Department of Justice has been investigating possible violations of US Federal antitrust laws in the DRAM industry. Subsequent to the commencement of the investigation by the U.S. Department of Justice, a total of 24 purported class action lawsuits were filed against Infineon and other DRAM suppliers in various federal and state courts in the United States. The complaints allege violations of federal and state antitrust and competition laws and seek significant damages on behalf of the plaintiffs. In connection with these investigations and in accordance with US GAAP, Infineon established an accrual of Euro 28 million in the fourth quarter of fiscal year 2003. Infineon is, at this time, unable to predict the financial and other impact that these investigations and lawsuits may have on the company. end of ad-hoc-announcement (c)DGAP 10.11.2003 Issuer’s information/explanatory remarks concerning this ad-hoc-announcement: FISCAL YEAR 2003 RESULTS (October 1, 2002 to September 30, 2003) Total revenues for fiscal year 2003 were Euro 6.15 billion, up 26 percent compared to the previous fiscal year. Net loss amounted to Euro 435 million compared to a net loss of Euro 1.02 billion in the previous year. It includes a non-cash charge of Euro 182 million to increase the deferred tax valuation allowance, compared to an allowance of Euro 271 million established in the prior year. Basic and diluted loss per share was Euro 0.60, which improved from a loss per share of Euro 1.47 in fiscal year 2002. EBIT was a loss of Euro 299 million, compared to a loss of Euro 1.14 billion in the previous year. This significant improvement in EBIT loss was mainly due to increased demand and productivity in all business groups as well as improved pricing for memory products and higher demand for secure mobile solutions, especially during the second half of the fiscal year. Free cash flow improved significantly to a negative Euro 53 million from negative Euro 360 million in fiscal year 2002. Infineon’s gross cash position, representing cash and cash equivalents, marketable securities and restricted cash, rose to Euro 2.8 billion in fiscal year 2003, an increase from Euro 2.0 billion at the end of the prior year. OUTLOOK “I feel that we can talk about a market upswing but we should not become too enthusiastic. For the 2004 fiscal year we plan to make capital expenditures of between Euro 1.0 to 1.5 billion and financial investments ranging between Euro 200 to 400 million. Given the more positive market prospects, we anticipate moving towards the upper end of this range. We have positioned ourselves to be on track with our strategic objectives, and expect to see further growth in demand for our automotive semiconductors, and memory products. In our Wireline Communications business group, we are confident to see further growth in the broadband access market for ADSL. In our secure mobile solutions business, we expect to grow along with the market in fiscal year 2004,” said Dr. Schumacher. Since the strong seasonal effect Infineon enjoyed in the fourth quarter 2003 will not hold throughout the full first quarter of fiscal year 2004, the company expects lower average demand in the secure mobile solutions market for the first quarter of fiscal year 2004. During fiscal year 2004, the company expects growth along with the market for this business group. For the first quarter of fiscal year 2004, Infineon remains cautious about the wireline communication market due to ongoing strong pricing pressure, still weak investment in infrastructure by carriers, and uncertainties regarding standardization in VDSL. However, the company believes that the broadband access market for ADSL will show solid growth later in fiscal year 2004. In general, Infineon expects solid growth for this business group in the second half of fiscal year 2004. Due to the slower growth of the worldwide automobile production in the first half of fiscal year 2004, Infineon expects a moderate market growth for automotive electronics and automotive semiconductor manufacturers. With the change from single product business to complete application specific chip sets, Infineon anticipates an ongoing stable growth which is faster than the market in its automotive business. In its power management & supply segment, the company is further confident for continuous growth. In the fourth quarter of fiscal year 2003, Infineon saw increased sequential demand and steadily rising prices for memory products. It expects a stable level of demand during the first quarter of fiscal year 2004, mainly driven by the Christmas season, and the need for increased system memory per PC. According to estimates of major market researchers, a strong ten percent growth in PC unit demand is expected for fiscal year 2004, based on increasing corporate replacement of older equipment. Supply growth is assumed to be rather limited as a consequence of the low industry capital expenditure levels of the last two calendar years. “In fiscal year 2003, we have been growing faster than the market as a whole and have increased our overall market share from 3.4 percent in calendar year 2002 to current 4.0 percent of the worldwide semiconductor market. Our Memory Products group has further improved its number 3 position in the DRAM market. Achieving profitability in the fourth quarter of fiscal year 2003 was a major step towards increased profitability in the future. From today’s perspective, if market conditions remain steady, we are confident that we will generate a profit for the entire 2004 fiscal year,” commented Dr. Schumacher. DISCLAIMER This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structures, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements. ——————————————————————————– WKN: 623100; ISIN: DE0006231004; Index: DAX Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart; NYSE 100731 Nov 03