Infineon Technologies AG

Earnings Release • Jul 26, 2005

News Details

Ad-hoc | 26 July 2005 07:30

Infineon Technologies AG: Results for third quarter of financial year 2005

Ad hoc announcement §15 WpHG Quarterly Results and Outlook Infineon Technologies AG: Results for third quarter of financial year 2005 Ad hoc announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Infineon reports results for third quarter of financial year 2005 and provides outlook for the fourth quarter THIRD QUARTER 2005 RESULTS (April 1 to June 30, 2005) In Euro million Q3 FY 2005 Q2 FY 2005 +/- Q3 FY 2004 +/- Revenues 1,606 1,606 +0% 1,908 -16% Ebit -234 -117 -100% 2 — Net income -240 -114 — -56 — Earnings per share (EUR) -0.32 -0.15 — -0.08 — Munich, July 26, 2005. Revenues of Euro 1.61 billion in the third quarter were stable compared to the second quarter, reflecting increased revenues of the Memory Products segment, offset by reduced revenues in the Communication and the Automotive, Industrial and Multimarket segments. Revenues of the Memory Products segment increased in the third quarter, primarily as a result of an approximate 45 percent bit-shipment growth, which more than offset a price- per-bit decline of approximately 30 percent compared to the previous quarter. In the Communication segment, revenues in the wireline business were stable in the third quarter, whereas demand for baseband components continued to decline. In the Automotive, Industrial and Multimarket segment, slight improvements in revenues of the automotive and industrial businesses could not fully offset further deterioration in the security and chip-card business. Net loss in the third quarter was Euro 240 million compared to a net loss of Euro 114 million in the prior quarter. Basic and diluted loss per share was Euro 0.32, compared to a loss per share of Euro 0.15 in the previous quarter. Third quarter EBIT loss increased to Euro 234 million from Euro 117 million in the prior quarter. The EBIT loss increase was mainly driven by significantly lower price levels in the Memory Products segment compared to the previous quarter, as well as continuous pricing pressure primarily in the security and chip-card businesses. In addition, EBIT was negatively impacted by charges of Euro 81 million, primarily in connection with the planned phase-out of production at the company’s Munich-Perlach facility and impairment charges in the Communication segment. Second quarter EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from reorganization measures in the Communication segment. NINE MONTHS RESULTS (October 1, 2004, to June 30, 2005) Total revenues for the first nine months of financial year 2005 were Euro 5.03 billion, down 3 percent from Euro 5.20 billion in the same period last year. EBIT loss in the first nine months of financial year 2005 was Euro 140 million, compared with positive Euro 143 million in the same period last year. Net loss for the first nine months amounted to Euro 212 million, compared to net income of Euro 17 million in the same period last year. BUSINESS GROUPS’ OUTLOOK FOR THE FOURTH QUARTER OF FINANCIAL YEAR 2005 Automotive, Industrial and Multimarket: In the fourth quarter of financial year 2005, Infineon expects to benefit from seasonal strengths in its automotive and industrial businesses. However, the company anticipates no improvement in the security and chip-card business during the fourth quarter and will continue to focus on productivity improvements. The planned phase-out of production at Munich-Perlach and start-up costs for the new production site in Kulim, Malaysia will negatively impact EBIT through the end of calendar year 2006. In the overall Automotive, Industrial and Multimarket segment, Infineon expects stable revenues and EBIT for the fourth quarter. Communication: In the fourth quarter of financial year 2005, the company expects revenues of its Communication segment to remain stable or slightly increase compared to the third quarter. The company expects the segment’s EBIT loss to remain stable or decrease slightly compared to the EBIT loss excluding impairment charges in the third quarter of the financial year. Memory Products: For the fourth quarter of financial year 2005, Infineon expects a further increase in memory loads per system and worldwide demand for memory products, as well as only moderate growth of supply in the industry due to capacity shifts to non-DRAM products by some of the company’s competitors. As a consequence, the company anticipates a rather balanced supply and demand environment in the market, facilitating price stability during the quarter. In addition, the company expects to gain further market share with its bit shipments further increasing at a rate above market growth, as a result of constantly increasing capacities at the company’s joint venture and foundry partners and due to the start of ramp-up of the 300- millimeter production facility in Richmond. The company will continue to focus on the diversification of its memory product portfolio with the goal to improve margins and reduce price volatility. Infineon Technologies AG St.-Martin-Str. 53 81669 München Deutschland ISIN: DE0006231004 (DAX) WKN: 623100 Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart; NYSE End of ad hoc announcement (c)DGAP 26.07.2005 Issuer’s information/explanatory remarks concerning this ad hoc announcement: “We have made good progress in our corporate restructuring. However, in the third quarter we have seen adverse effects on memory products and security and chip-card ICs as well as at some of our baseband customers,” said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG. “In spite of this, we expect an improved fourth quarter compared to the third quarter.” 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 structure sizes, 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. End of message (c)DGAP 260730 Jul 05