Infineon Technologies AG

Earnings Release • Nov 9, 2004

News Details

Ad-hoc | 9 November 2004 07:30

Infineon reports fourth quarter and fiscal year 2004 results

Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Infineon reports increased revenues and earnings for fourth quarter and fiscal year 2004 FOURTH QUARTER 2004 RESULTS (July 1 to September 30, 2004) In Euro million Q4 FY 2004 Q3 FY2004 +/- Q4 FY2003 +/- Revenues 1,993 1,908 +4% 1,756 +13% Net income 44 -56 +++ 49 -10% EBIT 113 2 +++ 67 +69% Earnings per share (EUR) 0,06 -0,08 +++ 0,07 -14% Fourth quarter revenues were Euro 1.99 billion, up 4 percent sequentially, reflecting higher sales in all segments, except Memory Products. Growth was primarily driven by strong seasonal demand for mobile solution products of the Secure Mobile Solutions segment, as well as continued strength in the Automotive and Industrial segment. Net income was Euro 44 million, up from a net loss of Euro 56 million in the previous quarter. Basic and diluted earnings per share was Euro 0.06, compared to a loss per share of Euro 0.08 in the previous quarter. EBIT increased to Euro 113 million, up from Euro 2 million in the previous quarter. EBIT was negatively affected by impairment and antitrust related charges of Euro 132 million compared to Euro 186 million in the previous quarter. All Infineon segments other than Wireline Communications recorded improved EBIT for the quarter, due to increased productivity and higher sales volumes. Free cash flow decreased to Euro 70 million from Euro 146 million in the previous quarter, principally reflecting increased capital expenditures. FISCAL YEAR 2004 RESULTS (October 1, 2003 to September 30, 2004) In Euro million FY 2004 FY 2003 +/- Revenues 7,195 6,152 +17% Net income 61 -435 +++ EBIT 256 -299 +++ Earnings per share (EUR) 0,08 -0,60 +++ Fiscal year 2004 revenues were Euro 7.19 billion, up 17 percent year-on-year. This improvement was driven by steadily increasing sales volumes combined with a more stable pricing environment in all segments except Wireline Communications. Net income was Euro 61 million, up from a net loss of Euro 435 million last year. Basic and diluted earnings per share was Euro 0.08, which improved from a loss per share of Euro 0.60 in fiscal year 2003. EBIT increased to Euro 256 million, up from an EBIT loss of Euro 299 million in 2003, despite impairment and antitrust related charges of Euro 345 million in fiscal year 2004 compared to Euro 126 million in fiscal year 2003. Cash flow from operations increased to Euro 1.86 billion, up from Euro 730 million in 2003. Free cash flow in 2004 was Euro 206 million, significantly improved from a negative Euro 53 million in 2003. The net cash position at the end of the fiscal year amounted to Euro 548 million, increasing from Euro 261 million as of September 30, 2003. During the year, the company redeemed a notional amount of Euro 360 million of the subordinated convertible bonds, due 2007. end of ad-hoc-announcement (c)DGAP 09.11.2004 Issuer’s information/explanatory remarks concerning this ad-hoc-announcement: “We were able to strongly increase revenues and operating cash flow during the last fiscal year but are not satisfied with Infineon’s earnings,” said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG. “Our primary goal for the upcoming years is to improve productivity and increase efficiency while containing our cost base. I am convinced of Infineon’s extraordinary know- how, innovational strengths, and the competence of our employees. These factors, combined with the competitive position we currently have, provide a solid base to achieve this goal.” OUTLOOK FOR THE FIRST QUARTER OF FISCAL YEAR 2005 Infineon sees signs of a slowdown in several of its application segments during the first quarter of fiscal year 2005. In these markets, inventory levels have gone up as compared to the previous quarters. On average, industry experts forecast a reduction of the rate of growth of the worldwide semiconductor market from nearly 30 percent based on US dollars during calendar year 2004 to a single-digit rate of growth during calendar year 2005. This projection implies stagnation in the industry when looking at sequential average growth for the quarters of fiscal year 2005. “During fiscal year 2004, we were able to benefit from the improved market conditions in the worldwide semiconductor industry. Without the impairment and antitrust related charges, fiscal year 2004 would have been more profitable for Infineon,” commented Dr. Ziebart. “In fiscal year 2004, we showed a revenue improvement for every quarter. But now we have to prepare ourselves for a slowdown.” Automotive and Industrial segment: In the automotive industry, Infineon anticipates continuing price pressure and no major market changes in demand for semiconductors. For the Industrial segment, the company sees a slightly weaker market. Due to these developments in combination with seasonal effects, Infineon expects a slight reduction in revenues and earnings in the first quarter of fiscal year 2005. Wireline Communications segment: Due to continuing pricing pressure and marketplace inventory corrections, especially in the Asian market, Infineon does not expect growth in the first quarter of fiscal year 2005. EBIT loss of Wireline Communications is expected to be significantly reduced if and when the sale of the fiber optics business to Finisar Corporation is closed. Secure Mobile Solutions segment: With signs of a slowdown and higher marketplace inventories, especially in the Asian mobile phone market, customers have started to significantly slow down new orders. Infineon therefore anticipates a significant reduction in revenues for the first quarter of fiscal year 2005 resulting in lower capacity utilization and margin pressure. As market research institutes predict a slowdown in growth of the mobile phone market for the calendar year 2005, Infineon is cautious about the development of sales volumes and expects lower utilization rates in manufacturing throughout the 2005 fiscal year. Memory Products segment: For the first quarter of fiscal year 2005, Infineon expects business in line with normal seasonal demand. Based on additional capacities from its Inotera joint venture, and foundry partners, Infineon anticipates an increase of bit production. 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, and 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, the outcome of antitrust investigations and litigation matters, 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 090730 Nov 04