Earnings Release • Nov 14, 2012
Earnings Release
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Corporate | 14 November 2012 07:30
Infineon Technologies AG: Infineon achieves revenue and earnings targets for the 2012 fiscal year despite headwinds; Management Board proposes an unchanged dividend of EUR0.12 per share
Infineon Technologies AG / Key word(s): Quarter Results/Final Results
14.11.2012 / 07:30
– Q4 FY 2012: revenue EUR982 million, Segment Result EUR116 million
– Outlook for Q1 FY 2013: decrease in revenue by a low teens percentage compared to Q4 FY 2012 and a Segment Result Margin of between 4 and 6 percent of revenue
– Outlook FY 2013: decrease in revenue compared to previous fiscal year by a mid- to high-single digit percentage rate and Segment Result Margin at a mid- to high-single digit percentage of revenue
– Cost-cutting measures are being implemented. Budgeted investment for FY 2013 reduced from EUR500 million to approximately EUR400 million (FY 2012: EUR890 million)
Neubiberg, Germany – November 14, 2012 Infineon Technologies AG today reported results for the fourth quarter and the 2012 fiscal year, both ended September 30, 2012.
| in Euro million | Q4 FY12 | Q3 FY12 | +/- in % |
| Revenue | 982 | 990 | (1) |
| Segment Result | 116 | 126 | (8) |
| Segment Result Margin [in %] | 11,8% | 12.7% | |
| Income (loss) from continuing operations | 129 | 90 | 43 |
| Income (loss) from discontinued operations, net of income taxes | 9 | (8) | 213 |
| Net income | 138 | 82 | 68 |
| in Euro | |||
| Basic earnings (loss) per share from continuing operations | 0.12 | 0.08 | 50 |
| Basic earnings (loss) per share from discontinued operations | 0.01 | – | +++ |
| Basic earnings per share | 0.13 | 0.08 | 63 |
| Diluted earnings (loss) per share from continuing operations | 0.12 | 0.08 | 50 |
| Diluted earnings (loss) per share from discontinued operations | 0.01 | – | +++ |
| Diluted earnings per share | 0.13 | 0.08 | 63 |
'The sovereign debt crisis on the one hand and a slowdown in economic growth in Asia on the other have had an adverse impact on the global economy. Despite these economic headwinds, Infineon has performed well in the 2012 fiscal year and we have achieved our targets', stated Dr. Reinhard Ploss, CEO of Infineon Technologies AG.
GROUP PROFIT FOR 2012 FISCAL YEAR
Global economic uncertainties caused by high public-sector debt levels in Europe caused customers to be increasingly cautious in their willingness to spend as the 2012 fiscal year took its course. After recording revenue growth of 51 percent in the 2010 fiscal year and a further rise of 21 percent in the 2011 fiscal year, Group revenue declined by 2 percent to EUR3.904 billion for the 2012 fiscal year.
The worldwide economic slowdown had the greatest effect on demand for power semiconductors for use in industrial, computing and consumer applications: Revenue in the Power Management & Multimarket (PMM) segment fell by 7 percent and that of the Industrial Power Control (IPC) segment by 9 percent compared to the previous fiscal year. By contrast, the Automotive (ATV) and Chip Card & Security (CCS) segments both achieved revenue growth of 7 percent. Overall, revenue from these four core segments, at EUR3.774 billion, almost reached last fiscal year's level. The decline in Group revenue was predominantly attributable to the phasing out of manufacturing services relating to the divested Wireline Communications and Wireless mobile phone businesses. Revenues from these operations are allocated to Other Operating Segments (OOS) and fell by 42 percent or EUR91 million to EUR125 million.
In view of the ongoing favorable outlook for long-term growth in the focus areas of energy efficiency, mobility and security and after a phase of almost two years with bottlenecks in production, development and sales, Infineon has increased capacities in these areas. With these investments Infineon is positioned excellently to fully capitalize on any economic recovery by satisfying the demand of our customers. In the fiscal year 2012, however, the consequence was a decrease in Segment Result, with revenue slightly down and expenditures for production, development, sales and administration all up. Segment Result went down accordingly by EUR259 million from EUR786 million in the previous fiscal year to EUR527 million for the 2012 fiscal year. The Segment Result Margin fell from 19.7 percent to 13.5 percent. Nonetheless, Infineon has met its forecast – communicated one year ago – of a Segment Result Margin within a low to mid-teens percentage range of sales. Slightly lower revenue due to a slowdown in the economy, particularly in the second half of the fiscal year, were compensated by a somewhat stronger US dollar. The average Euro/US dollar exchange rate in the 2012 fiscal year was 1.30 compared to a rate of 1.40 used in the forecast.
Income from continuing operations for the two periods dropped from EUR744 million to EUR432 million.
Infineon finished the 2012 fiscal year with a very solid liquidity position with gross cash of EUR2.235 billion and a net cash of EUR1.940 billion. A dividend of EUR130 million was paid for the 2011 fiscal year. Payments for the repurchase of subordinated convertible bonds due in 2014 and for share buybacks amounted to EUR62 million and EUR20 million, respectively. Overall, a total of EUR212 million was returned to capital markets.
DIVIDEND FOR 2012 FISCAL YEAR
The Management Board will propose to the Supervisory Board and subsequently to shareholders at the Annual General Meeting to be held in February 2013 that Infineon Technologies AG shall pay an unchanged dividend of EUR0.12 per share for the 2012 fiscal year. The fact that the dividend is to remain steady despite lower earnings and a moderate demand outlook reflects the Management Board's confidence in Infineon's long-term prospects and is consistent with the stated objective of pursuing a dividend policy of keeping the dividend at least constant compared to the previous year, even during periods of flat or lower earnings. If approved by the Supervisory Board and the Annual General Meeting, the total dividend would amount to approximately EUR129 million.
GROUP EARNINGS IN FOURTH QUARTER OF 2012 FISCAL YEAR
Fourth-quarter Group revenue totalled EUR982 million, 1 percent down from the previous quarter's EUR990 million.
Segment result fell from EUR126 million in the third quarter to EUR116 million in the fourth quarter, resulting in a Segment Result Margin of 11.8 percent compared to 12.7 percent one quarter earlier. In addition to lower revenue, Segment Result was also negatively affected by rising production and operational costs.
Income from continuing operations rose from EUR90 million in the third quarter to EUR129 million in the fourth quarter 2012. A reassessment of deferred tax assets, both inside and outside Germany, resulted in the recognition of an income tax benefit in the fourth quarter amounting to EUR52 million. A tax expense of EUR13 million was reported for the third quarter.
Basic and diluted earnings per share from continued operations improved from EUR0.08 in the previous quarter to EUR0.12 in the final quarter of the 2012 fiscal year.
Income from discontinued operations in the fourth quarter was positive EUR9 million, compared to negative EUR8 million reported for the third quarter. Basic and diluted earnings per share from discontinued operations improved from EUR0.00 to EUR0.01 during the last two quarters of the 2012 fiscal year.
Net income rose in the fourth quarter to EUR138 million, up from EUR82 million in the previous quarter. Earnings per share went up from EUR0.08 to EUR0.13 (basic and diluted).
Investments – which the Company defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized research and development assets – rose in the final quarter of the 2012 fiscal year to EUR246 million, compared to third quarter investments totalling EUR158 million. The depreciation and amortization expense increased slightly to EUR115 million, compared to a third-quarter expense of EUR113 million.
Despite significantly higher disbursements for investments, free cash flow from continuing operations improved from negative EUR22 million in the third quarter to positive EUR47 million in the fourth quarter. One consequence of the higher level of investment expenditure was an increase in trade payables.
The gross cash position as of September 30, 2012 improved to EUR2.235 billion, compared to EUR2.150 billion at the end of the third quarter. The net cash position at the end of the 2012 fiscal year stood at EUR1.940 billion, slightly higher than the EUR1.907 billion reported three months earlier. The increase in the net cash position reflects positive free cash flow in the final quarter on the one hand and a cash outflow of EUR12 million for the repurchase of convertible bonds due 2014 with a nominal value of EUR5 million.
OUTLOOK FOR FIRST QUARTER OF 2013 FISCAL YEAR
Infineon forecasts a reduction in revenue in the first quarter of the 2013 fiscal year of a low teens percentage compared to the final quarter of the 2012 fiscal year. All segments are expected to report lower revenue, with the IPC segment most affected given the weak demand for capital goods. Predominantly as a result of the drop in revenue, the Segment Result Margin is expected to come in at between 4 and 6 percent of revenue.
OUTLOOK FOR 2013 FISCAL YEAR
Based on an assumed Euro/US dollar exchange rate of 1.25, Infineon forecasts a reduction in revenue compared to the previous fiscal year by a mid- to high-single digit percentage rate. This outlook is based on the assumption that revenue will remain at reduced levels in the first half of the year and will improve considerably in the second half. Broken down by division, the ATV, PMM and CCS segments are expected to fare better than the Group average whereas IPC is expected to fare significantly worse than the Group average. Revenue of the OOS segment will again fall sharply, as goods and services sold relating to the Wireline Communications and Wireless mobile phone businesses divested in the previous year are further phased out.
'Macroeconomic headwinds are getting stronger and we do not see this changing in the near term. We are therefore forecasting a drop in revenue for the 2013 fiscal year. Nonetheless, Infineon continues to pursue the right strategy by focusing on energy efficiency, mobility and security', stated Dr. Reinhard Ploss, CEO of Infineon Technologies AG in his statement on the outlook for the new fiscal year.
Given the macroeconomic uncertainties and the prospect of further decreases in revenue, Infineon has decided a number of measures to stabilize its margin and will now proceed to implement them. In manufacturing, Infineon will, for example, adjust production costs through measures such as temporarily switching off underutilized equipment, reducing the temporary workforce and the selective use of short-time work. Additionally, budgeted investments for fiscal 2013 will be reduced from the previously-planned amount of 500 million Euros to 400 million Euros. In Research and Development and Sales and Marketing, amongst others, projects of lesser strategic importance will either be postponed or cancelled and costs related to external service providers will be reduced. Furthermore, the Company has frozen headcount at roughly the level reached at the end of the 2012 fiscal year and postponed certain salary increases. The orientation of the incentive scheme to long-term margin targets will add to these cost reductions. In total, the sum of all measures will lead to a cost savings exceeding 100 million Euros. Overall, taking account of the cost reduction measures already decided on, Infineon forecasts a Segment Result Margin for the 2013 fiscal year at a mid- to high-single digit percentage of revenue.
Infineon segments' performance in the fourth quarter and the 2012 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 will host a telephone conference call for analysts and investors (in English only) on November 14, 2012 at 10:00 am (CET), 4:00 am (EST). During the call, the Infineon Management Board will present the Company's results from the fourth quarter and 2012 fiscal year. In addition, the Management Board will host a live press conference at 11:30 am (CET), 5:30 am (EST). It can be followed over the Internet in both English and German. Both conferences will also be available live and for download on Infineon's website at www.infineon.com/investor .
The Q4 Investor Presentation is available (in English) at: http://www.infineon.com/cms/en/corporate/investor/reporting/index.html
INFINEON FINANCIAL CALENDAR (*preliminary)
– Nov 15 – 16, 2012 Morgan Stanley TMT Conference, Barcelona
– Nov 20 – 21, 2012 Company roadshow – including presentation by Dr. Helmut Gassel, Division President, Industrial Power Control (IPC), London
– Nov 27 – 28, 2012 Credit Suisse Technology Conference, Scottsdale/Arizona
– Dec 6, 2012 Payment Revolution Natixis Conference, London
– Jan 31, 2013* Earnings Release for the First Quarter of the 2013 Fiscal Year
– Feb 28, 2013 Annual General Meeting 2013, Munich, Germany
(Start: 10:00 a.m. CET)
– May 2, 2013* Earnings Release for the Second Quarter of the 2013 Fiscal Year
– Jul 30, 2013* Earnings Release for the Third Quarter of the 2013 Fiscal Year
– Nov 12, 2013* Earnings Release for the Fourth Quarter and Full 2013 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 2012 fiscal year (ending September 30), the Company reported sales of Euro 3.9 billion with close to 26,700 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 contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group.
These statements are based on assumptions and projections resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may therefore differ materially from what has been expected.
Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements.
End of Corporate News
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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: | [email protected] |
| 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 |
| End of News | DGAP News-Service |
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| 193073 14.11.2012 |
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