Infineon Technologies AG

Earnings Release • Nov 16, 2011

News Details

Ad-hoc | 16 November 2011 07:30

Infineon reports results for the fourth quarter of the 2011 fiscal year and provides outlook for the first quarter and the 2012 fiscal year

Infineon Technologies AG / Key word(s): Quarter Results

16.11.2011 07:30

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Quarter Results / Final Results

Q4 FY 2011 TOTAL SEGMENT RESULT OF EURO 195 MILLION AND FLAT SALES
COMPLETE THE RECORD 2011 FISCAL YEAR

QUARTERLY SALES OF EURO 1.038 BILLION ALMOST FLAT SEQUENTIALLY; TOTAL
SEGMENT RESULT MARGIN OF 18.8 PERCENT

2011 FISCAL YEAR: 21 PERCENT SALES GROWTH TO EURO 4.0 BILLION AT 19.7
PERCENT TOTAL SEGMENT RESULT MARGIN WITH GROUP NET INCOME IN EXCESS OF EURO
1 BILLION MARK ALL-TIME HIGHS FOR THE CURRENT PORTFOLIO. EURO 308 MILLION
OF CASH RETURNED TO THE CAPITAL MARKETS, DILUTED SHARE COUNT REDUCED BY
CIRCA 2.5 PERCENT

OUTLOOK FOR THE FIRST QUARTER OF THE 2012 FISCAL YEAR: SALES TO DECLINE
ABOUT TEN PERCENT; TOTAL SEGMENT RESULT MARGIN TO BE 13 TO 14 PERCENT

FY 2012 OUTLOOK: REVENUE EXPECTED TO BE DOWN A MID SINGLE DIGIT PERCENTAGE
VERSUS THE 2011 FISCAL YEAR WITH A LOW TO MID TEENS PERCENTAGE FOR TOTAL
SEGMENT RESULT MARGIN

Neubiberg, Germany - November 16, 2011 - Infineon Technologies AG today
reported results for the fourth quarter as well as the whole 2011 fiscal
year, ended September 30, 2011.

FOURTH QUARTER 2011 RESULTS (July 1 to September 31, 2011)

in Euro million Q4 FY11 Q3 FY11 +/- in
%
Revenue 1,038 1,043 (0)
Total Segment Result 195 212 (8)
Total Segment Result Margin [in %] 18.8% 20.3%
Income (loss) from continuing operations 247 175 41
Income from discontinued operations, net of (122) 15 ---
income taxes
Net income 125 190 (34)
in Euro
Basic earnings (loss) per share from continuing 0.23 0.16 44
operations
Basic earnings (loss) per share from (0.11) 0.01 ---
discontinued operations
Basic earnings per share 0.12 0.17 (29)
Diluted earnings (loss) per share from 0.22 0.16 38
continuing operations
Diluted earnings (loss) per share from (0.11) 0.01 ---
discontinued operations
Diluted earnings per share 0.11 0.17 (35)

REVIEW OF GROUP FINANCIALS FOR THE 2011 FISCAL YEAR
The 2011 fiscal year continued Infineon's improvements from the 2010 fiscal
year in a number of respects.

After 51 percent sales growth in the 2010 fiscal year, turnover grew
another 21 percent in the 2011 fiscal year to Euro 3.997 billion. This
annual turnover marks an all-time high for the current portfolio of
businesses. Infineon's growth outpaced that of the industry and the peer
group by a wide margin in two consecutive years.

Total Segment Result rose by 65 percent from the 2010 fiscal year to Euro
786 milllion with Total Segment Result margin of 19.7 percent. This, again,
is a record for the current portfolio of businesses.

Income from continuing operations more than doubled from Euro 312 million
in the 2010 fiscal year to Euro 744 million in the 2011 fiscal year. Helped
by gains from the sale of the Wireless mobile phone business, net income
exceeded the Euro one billion mark to stand at Euro 1.119 billion.

Infineon closed the 2011 fiscal year with a strong balance sheet, posting
Euro 2.692 billion of gross cash and Euro 2.387 billion of net cash. Such
values are up from gross and net cash at the end of the 2010 fiscal year of
Euro 1.727 billion and Euro 1.331 billion, respectively.

Cash returns to capital markets during the 2011 fiscal year totaled Euro
308 million. Of that amount, Euro 109 million was spent on the annual
dividend. Euro 173 million was used towards repurchases of the 2014
convertible bond and Euro 26 million were spent on share repurchases.
Through the combination of bond and share repurchases, Infineon reduced the
diluted number of shares by 29 million or by about 2.5 percent over the
course of the fiscal year.

The Infineon share price rose 10 percent over the course of the 2011 fiscal
year, outperforming the Dax index by 22 percentage points.

REVIEW OF GROUP FINANCIALS FOR THE FOURTH QUARTER OF THE 2011 FISCAL YEAR
Infineon's revenues in the fourth quarter were Euro 1.038 billion,
essentially flat compared to Euro 1.043 billion in the third quarter.
Rising macroeconomic uncertainty due to the European debt crisis prevented
further revenue growth.

Fourth quarter Total Segment Result was Euro 195 million, a decrease of 8
percent compared to Euro 212 million in the prior quarter. Total Segment
Result margin in the fourth quarter decreased to 18.8 percent, down from
20.3 percent in the third quarter. Aside from the lack of revenue growth,
Total Segment Result decreased also as depreciation and amortization grew
to Euro 98 million from Euro 94 million in the prior quarter and as
Operating Expenses rose to Euro 229 million from Euro 223 million in the
prior quarter. The expiry of service agreements under which Infineon
provided services for its former Wireless mobile phone business contributed
to higher expenses both within the Cost of Goods Sold and within Operating
Expenses.

In the fourth quarter, income from continuing operations rose to Euro 247
million from Euro 175 million in the prior quarter despite the decline in
Total Segment Result as a tax expense of Euro 24 million in the third
quarter of the 2011 fiscal year swung to a tax benefit of Euro 75 million
in the fourth quarter of the 2011 fiscal year. The tax benefit in the last
quarter of the 2011 fiscal year resulted primarily from two non-recurring
effects. Firstly, Infineon booked an increase in its Deferred Tax Assets as
sustainable profitability of Infineon Technologies AG resulted in higher
anticipated future usage of net operating loss carry forwards. Secondly,
differences in respect of the treatment of certain items for IFRS and tax
purposes had an additional positive effect. Excluding such non-recurring
benefits, the tax rate would be in the expected range from 10 to 15
percent.

Loss from discontinued operations, net of income taxes was Euro 122 million
compared to income from discontinued operations of Euro 15 million in the
previous quarter. The loss arose due to additional provisions totaling Euro
144 million, net of taxes, in connection with the insolvency proceedings of
Qimonda AG. The basic and diluted loss from discontinued operations per
share stood at Euro 0.11 per share, down from basic and diluted earnings
per share of Euro 0.01 in the prior quarter.

Net income was Euro 125 million compared with Euro 190 million in the
quarter before. In the fourth quarter, basic earnings per share were Euro
0.12 compared with Euro 0.17 in the prior quarter and diluted earnings per
share were Euro 0.11 compared with Euro 0.17 in the quarter before.

Investments, which the Company defines as the sum of purchases of property,
plant and equipment, purchases of intangible assets and capitalized
research & development assets, were Euro 273 million in the fourth quarter,
down from Euro 319 million in the prior quarter. Investments in the third
quarter included a cash outflow of Euro 91 million for the purchase of real
estate including a cleanroom and manufacturing facilities as well as
300-millimeter manufacturing equipment from the insolvency administrator of
the Qimonda Dresden GmbH & Co. OHG.

Depreciation and amortization rose to Euro 98 million, compared to Euro 94
million in the prior quarter, due to higher investments over the last
quarters.

Free cash flow from continuing operations for the fourth quarter was Euro
97 million, up significantly from negative Euro 8 million for the third
quarter. The increase was due to tighter working capital management and
lower investments relative to the third quarter of the 2011 fiscal year.
Free cash flow from discontinued operations was Euro 102 million, up from
negative Euro 75 million in the preceding quarter. The sale of inventory
held for the former Wireless mobile phone business to Intel Mobile
Communications (IMC) drove up free cash flow from discontinued operations
this quarter, while the settlement of certain personnel related liabilities
with IMC had a negative impact in the prior quarter. Group free cash flow
for the quarter hence amounted to Euro 199 million.

The strong free cash flow generation drove increases in the Company's gross
cash position to Euro 2,692 million and its net cash position to Euro 2,387
million as of September 30, 2011. Both increased from Euro 2,585 million
and Euro 2,246 million, for gross and net cash, respectively, as of June
30, 2011.

Part of the positive free cash flow of the quarter was used towards total
capital returns to financial markets of Euro 76 million. Infineon
repurchased a nominal value of Euro 18.7 million of its 2014 convertible
bond during the quarter for Euro 50 million in cash. Consequently, the
Company's fully diluted sharecount was reduced by 8.1 million shares or
approximately 0.7 percent of the fully diluted number of shares outstanding
during the third quarter of the 2011 fiscal year. In addition, the Company
repurchased 4 million shares through the exercise of put options under its
share buy-back program for Euro 26 million in cash. This repurchase equates
to a reduction of the number of basic and fully diluted shares outstanding
during the third quarter of the 2011 fiscal year of approximately 0.3
percent. The total reduction of diluted shares effected during the quarter
hence amounts to 1.0 percent of diluted shares outstanding during the third
quarter of the 2011 fiscal year.

OUTLOOK FOR THE FIRST QUARTER OF THE 2012 FISCAL YEAR
Subsequent to the pre-announcement dated October, 14, 2011, the Company has
observed increasing caution also on the part of customers in the typical
late-cycle high power businesses such as, for example, industrial drives.
Taking this into account, Infineon for the first quarter of the 2012 fiscal
year now expects a sequential revenue decline of about 10 percent and 13 to
14 percent Total Segment Result margin.
Within the expected Group turnover development, Automotive (ATV) revenue is
expected to be down slightly quarter-over-quarter, whilst sales in
Industrial & Multimarket (IMM), Chip Card & Security (CCS) and Other
Operating Segments (OOS) should exhibit more pronounced declines.

OUTLOOK FOR THE 2012 FISCAL YEAR
At an assumed Euro/U.S. Dollar exchange rate of 1.40, the Company expects
full-year revenue to be down a mid single digit percentage relative to the
2011 fiscal year. Within this sales outlook, the Company expects revenue in
ATV to develop better than the corporate average, whilst sales in IMM and
CCS should develop slightly worse than the Group average. In addition, the
Company anticipates a revenue decline in Other Operating Segments of about
40 percent relative to the level of the 2011 fiscal year due to planned
reductions in wafer supplies to previously divested businesses.

Total Segment Result margin for the 2012 fiscal year is expected to be a
low to mid teens percentage of revenues. Within this outlook, the Company
assumes a mid single digit revenue decline, a reduction in gross margin to
below 40 percent and a 5 to 10 percent increase in operating expenses
relative to the 2011 fiscal year. The Company is convinced that secular
demand drivers such as the trends towards hybrid and electric vehicles,
renewable energies and reduced electricity consumption remain intact. As
such, whilst measures have been implemented to curb expense increases, the
Company is maintaining high efforts in research and development as well as
in selling in order to fully capitalize on its end markets' growth
potential beyond the 2012 fiscal year.

For the 2012 fiscal year Infineon expects investments to be about flat
compared with the levels of the 2011 fiscal year. As part of its investment
budget, the Company will expand its capacity at its Dresden site in Germany
for 300-millimeter production. The Company regards this as a strategic
investment in manufacturing technology to bolster its lead over
competition. In addition, Infineon will construct a second 200-millimeter
wafer fabrication building at its highly cost-efficient site in Kulim,
Malaysia. With full conviction regarding the long-term growth potential of
its addressed markets, the planned investments during the 2012 fiscal year
are intended to enable highly competitive growth beyond the 2012 fiscal
year. Given long lead times between equipment orders, equipment
installation and revenue generation, investments have to be made in the
2012 fiscal year in order to enable growth in later periods. Depreciation
and amortization is expected to be about Euro 430 million compared with
Euro 364 million in the previous year.

Infineon segments' performance in the fourth quarter of the 2011 fiscal
year can be found in the quarterly information at http://www.infineon.com.

All figures in this quarterly information are preliminary and unaudited.

ANALYST TELEPHONE CONFERENCE AND PRESS CONFERENCE
Infineon Technologies AG will conduct a telephone conference (in English
only) with analysts and investors on November 16, 2011, at 10:00 a.m.
Central European Time (CET), 4:00 a.m. Eastern Standard Time (U.S. EST), to
discuss operating performance during the fourth quarter and the 2011 fiscal
year. In addition, the Infineon Management Board will host a press
conference at 11:30 a.m. (CET), 5:30 a.m. (U.S. EST). It can be followed in
German and English over the Internet. Both conferences will be available
live and for download on the Infineon web site at
www.infineon.com/investor.

PLEASE FIND THE Q4 INVESTOR PRESENTATION ON OUR WEB SITE AT
http://www.infineon.com/cms/en/corporate/investor/reporting/index.html

IFX FINANCIAL CALENDAR (*preliminary date)

• Nov 17-18, 2011 Morgan Stanley TMT Conference, Barcelona, Spain

• Nov 22, 2011 Web cast, fourth quarter results, Automotive segment

• Nov 29-30, 2011 Credit Suisse Technology Conference, Scottsdale, AZ,
  USA

• Feb 1, 2012* Earnings Release for the First Quarter of the 2012 Fiscal
  Year

• Mar 8, 2012* Annual General Meeting 2012, Munich, Germany(Start: 10:00
  a.m. CET)

• May 3, 2012* Earnings Release for the Second Quarter of the 2012 Fiscal
  Year

• Jun 28, 2012* IFX Day 2012 - Infineons Capital Markets Day,Campeon
  Neubiberg (Munich), Germany

• Jul 31, 2012* Earnings Release for the Third Quarter of the 2012 Fiscal
  Year

• Nov 13, 2012* Earnings Release for the Fourth Quarter and Full 2012
  Fiscal Year

ABOUT INFINEON

Infineon Technologies AG, Neubiberg, Germany, offers semiconductor and
system solutions addressing three central challenges to modern society:
energy efficiency, mobility, and security. In the 2011 fiscal year (ending
September 30), the Company reported sales of Euro 4.0 billion with close to
26 thousand employees worldwide. Infineon is listed on the Frankfurt Stock
Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market
OTCQX International Premier (ticker symbol: IFNNY).

D I S C L A I M E R

This press release includes forward-looking statements and assumptions
about the future of Infineon's business and the industry in which we
operate as well as our expected future results. These include statements
and assumptions relating to general economic conditions, future
developments in the world semiconductor market, our ability to manage our
costs and to achieve our savings and growth targets, the resolution of
Qimonda's insolvency proceedings and the liabilities we may face as a
result of Qimonda's insolvency, the benefits of research and development
alliances and activities, our planned levels of future investment, the
introduction of new technology at our facilities, our ability to continue
to offer commercially viable products.

These forward-looking statements are subject to a number of uncertainties,
including broader economic developments, trends in demand and prices for
semiconductors generally and for our products in particular, as well as for
the end-products that incorporate our products, the success of our
development efforts, both alone and with partners; the success of our
efforts to introduce new production processes at our facilities, the
actions of competitors; the continued availability of adequate funds, the
outcome of antitrust investigations and litigation matters, and the outcome
of Qimonda's insolvency proceedings, as well as the other factors mentioned
in this press release and our quarterly and annual reports.

As a result, Infineon's actual results could differ materially from those
contained in these forward-looking statements. You are cautioned not to
place undue reliance on these forward-looking statements. Infineon does not
undertake any obligation to publicly update or revise any forward-looking
statements in light of developments which differ from those
anticipated.

Kontakt:
Investor Relations, Tel.: +49 89 234-26655, Fax: +49 89 234-9552987

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Language: English
Company: Infineon Technologies AG
Am Campeon 1-12
85579 Neubiberg
Germany
Phone: +49 (0)89 234-26655
Fax: +49 (0)89 234-955 2987
E-mail: investor.relations@infineon.com
Internet: www.infineon.com
ISIN: DE0006231004
WKN: 623100
Indices: DAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart;
Terminbörse EUREX

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