Infineon Technologies AG

Earnings Release • Apr 26, 2005

News Details

Ad-hoc | 26 April 2005 07:30

Infineon Technologies AG: Results for second Quarter of Financial Year 2005

Ad hoc announcement §15 WpHG Quarterly Results and Outlook Infineon Technologies AG: Results for second 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 second quarter of financial year 2005 and provides outlook for the third quarter SECOND QUARTER 2005 RESULTS (January 1 to March 31, 2005) In Euro million Q2 FY 2005 Q1 FY 2005 +/- Q2 FY 2004 +/- Revenues 1,606 1,816 -12% 1,671 -4% Net income -114 142 — 39 — EBIT -117 211 — 71 — Earnings per share (EUR) -0.15 0.19 — 0.05 — Munich, April 26, 2005. Second quarter revenues were Euro 1.61 billion, down 12 percent sequentially. Excluding license income of Euro 118 million realized in the first quarter from the settlement with ProMOS, revenues declined 5 percent sequentially, reflecting reduced revenues of the Communication and Memory Products segments. In the Communication segment, sales volumes decreased as a result of a seasonal slow-down of the worldwide mobile phone market coupled with a greater than seasonal decline in demand from some customers. In the Memory Products segment, revenues declined primarily due to the non-recurrence during the second quarter of license income of Euro 118 million from the settlement with ProMOS, and the strong decline of memory prices. Revenues in the Automotive, Industrial and Multimarket segment remained flat when compared to the previous quarter. Net loss was Euro 114 million, down from net income of Euro 142 million sequentially. Basic and diluted loss per share was Euro 0.15, compared to earnings per share of Euro 0.19 in the previous quarter. EBIT decreased to negative Euro 117 million from positive Euro 211 million in the prior quarter. The sequential EBIT decrease was partially driven by lower sales volumes in the Communication segment, and by the strong decline in memory prices. In addition, EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from the reorganization measures in the Communication segment. EBIT in the first quarter included a net aggregate positive impact of Euro 116 million resulting primarily from the license settlement with ProMOS, which did not recur in the second quarter. HALF YEAR RESULTS (October 1, 2004, to March 31, 2005) Total revenues for the first half of financial year 2005 were Euro 3.42 billion, up 4 percent from Euro 3.29 billion in the same period last year. Net income amounted to Euro 28 million, compared to Euro 73 million in the prior year. EBIT was Euro 94 million, a decrease from Euro 141 million in the same period last year. OUTLOOK FOR THE THIRD QUARTER OF FINANCIAL YEAR 2005 Infineon anticipates no major improvement in demand in the third quarter of financial year 2005. The company expects continued pricing pressure, especially for chip-card ICs, memory, and mobile phone products. However, growth in shipments, primarily in Memory Products, should partially offset the impact of pricing pressure on revenues and operating results. Results of operations are expected to be negatively affected by further charges related to the planned phase-out of production at Munich Perlach, which the company cannot currently quantify due to the early stage of discussions with the workers’ council. 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 26.04.2005 Issuer’s information/explanatory remarks concerning this ad hoc announcement: “As there are no near-term catalysts for growth in demand, especially in the memory and mobile phone businesses, in the third quarter we will continue to focus on cost-cutting measures and on restructuring non-profitable businesses,” commented Dr. Ziebart. “While this is a very difficult transition period, we believe that our pipeline of innovative products and the steps we have taken to further strengthen the company will put us into an improved competitive position next year.” BUSINESS GROUPS’ OUTLOOK FOR THE THIRD QUARTER OF FINANCIAL YEAR 2005 Automotive, Industrial and Multimarket: As the third quarter of the financial year typically shows seasonally strong demand in the automotive industry, Infineon expects further growth in its automotive business in the third quarter of 2005. On the other hand, the company anticipates continuing pricing pressure in its industrial business and therefore expects earnings to decrease slightly in the upcoming quarter. In its security and chip-card business, Infineon anticipates continued weakness in the third quarter of financial year 2005, in line with the worldwide chip-card market. While the price decline for chip-card ICs is very hard to predict, Infineon anticipates that productivity improvements would be sufficient to offset the pressure on revenues and EBIT caused by falling prices. All in all, the company expects revenues and earnings of the segment to remain stable. Communication: In the third quarter of financial year 2005, the company expects revenues of its Communication segment to remain flat or to decrease slightly compared to the previous quarter, mainly due to continued weak demand from some customers for mobile phone components. Because of an anticipated continuation of pricing pressure in the overall Communication segment, and lower sales volumes, the company anticipates significant negative EBIT results for the third quarter of financial year 2005. However, Infineon expects the company’s recently initiated efficiency programs to start impacting financial results positively in the third quarter of the financial year. Accordingly, the company expects the segment’s losses to decrease compared to the second quarter of the financial year. Memory Products: For the third quarter of financial year 2005, Infineon expects an increase in system memory loads and worldwide demand for memories due to the price reductions for DRAMs in the second quarter of financial year 2005. The company’s bit shipments are expected to increase at a rate above market growth based on growing capacities at joint venture and foundry partners. The company will continue to focus on the expansion of its product portfolio with higher margin products as these are less exposed to price fluctuations. 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. End of message (c)DGAP 260730 Apr 05