Infineon Technologies AG

Earnings Release • Jul 31, 2012

News Details

Corporate | 31 July 2012 07:30

Infineon Technologies AG: Revenue approximately unchanged; Segment Result Margin reflects strategic investments

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

31.07.2012 / 07:30

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Quarter Results / Final Results

Infineon reports results for the third quarter of the 2012 fiscal year

Revenue approximately unchanged; Segment Result Margin reflects strategic investments

– Third-quarter revenue of Euro 990 million approximately unchanged compared to the previous quarter; Segment Result of Euro 126 million (12.7 percent margin)

– Outlook for fourth quarter 2012 confirmed: revenue flat to down slightly and Segment Result Margin of around 12 percent expected

– Planned investments in 2013 fiscal year to be significantly lower than in 2012 fiscal year

Neubiberg, Germany, July 31, 2012 – Infineon Technologies AG today reported results for the third quarter of the 2012 fiscal year (as of June 30, 2012).

in Euro million	Q3 FY12	Q2 FY12	+/- in %
Revenue	990	986	0
Segment Result	126	144	(13)
Segment Result Margin [in %]	12.7%	14.6%
Income (loss) from continuing operations	90	109	(17)
Income (loss) from discontinued operations, net of income taxes	(8)	2	(500)
Net income	82	111	(26)
in Euro
Basic earnings (loss) per share from continuing operations	0.08	0.10	(20)
Basic earnings (loss) per share from discontinued operations	–	–	–
Basic earnings per share	0.08	0.10	(20)
Diluted earnings (loss) per share from continuing operations	0.08	0.10	(20)
Diluted earnings (loss) per share from discontinued operations	–	–	–
Diluted earnings per share	0.08	0.10	(20)

'Growth and Margin are currently below plan, reflecting global uncertainties. The underlying trends for energy efficiency, mobility and security business nevertheless remain positive. We will therefore continue our policy of strategic investment, firmly convinced that this is the only way for Infineon to extend its market leadership in the future. That said, we will make savings now wherever savings are to be made. With this, the cost situation remains manageable even in the face of current market conditions', stated Peter Bauer, CEO of Infineon Technologies AG.

DETAILS WITH REGARD TO GROUP EARNINGS IN THE THIRD QUARTER OF FISCAL YEAR 2012

Infineon reported revenue of Euro 990 million for the third quarter of the 2012 fiscal year, approximately unchanged from the previous quarter's Euro 986 million. Slight increases recorded by the Automotive (ATV), Industrial Power Control (IPC) and Power Management & Multimarket (PMM) segments, as well as a sharp rise in revenue for the Chip Card & Security (CCS) segment, more than offset the expected decrease in revenue from Other Operating Segments (OOS). The Euro/US Dollar exchange rate had a positive impact of Euro 12 million on revenue.

Segment Result fell from Euro 144 million in the second quarter to Euro 126 million in the third quarter while the Segment Result Margin dropped from 14.6 percent to 12.7 percent. The principal reasons for the decrease were a higher expense for amortization and depreciation and increased research and development expenditures. As in previous quarters, the exchange rate risk was hedged according to Company policy. As a consequence, there was no positive exchange rate impact at the level of Segment Result.

Income from continuing operations for the third quarter amounted to Euro 90 million, down from Euro 109 million one quarter earlier. Earnings per share from continuing operations (basic and diluted) fell from Euro 0.10 per share in the previous quarter to Euro 0.08 per share.

The result from discontinued operations for the third quarter was a loss of Euro 8 million, compared to a profit of Euro 2 million in the previous quarter. Earnings per share from discontinued operations (basic and diluted) were unchanged at Euro 0.00.

Net income for the third quarter amounted to Euro 82 million, down from the Euro 111 million reported one quarter earlier. Third quarter basic and diluted earnings per share were Euro 0.08 compared with Euro 0.10 in the previous quarter.

Investments , which the Company defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and internally generated assets, amounted to Euro 158 million in the third quarter, compared to Euro 192 million in the preceding quarter. The expense for depreciation and amortization went up quarter-on-quarter from Euro 103 million to Euro 113 million.

Free cash flow from continuing operations decreased from negative Euro 10 million in the second quarter to negative Euro 22 million in the third, primarily reflecting an increase in net current assets, as inventory levels increased and payables to suppliers decreased due to payment of investments made in the previous quarter.

The gross cash position decreased marginally from Euro 2,190 million as at March 31, 2012 to Euro 2,150 million at June 30, 2012. The net cash position amounted to Euro 1,907 million, compared to Euro 1,927 million three months earlier.

OUTLOOK FOR FOURTH QUARTER OF FISCAL YEAR 2012 CONFIRMED

Infineon forecasts that fourth-quarter revenue will be flat or down slightly compared with third quarter revenue and that the Segment Result Margin will be approximately 12 percent. Due to seasonal factors, PMM revenue is expected to rise whereas ATV revenue is expected to fall. CCS revenue is likely to be slightly lower than in the third quarter, while IPC revenue should remain at a similar level. The decrease in revenue is also being driven by a lower level of product and service sales related to the previously sold Wireline Communications and Wireless mobile phone businesses.

OUTLOOK FOR FISCAL YEAR 2012

Based on the latest outlook for the fourth quarter, full-year revenue will be approximately 3 percent down from the previous year, reflecting lower revenue in the IPC and PMM segments and decreasing product and service sales in connection with the previously sold Wireline Communications and Wireless mobile phone businesses. The Segment Result Margin is forecast at between 13 and 14 percent of revenue. Investments will be at a similar level to the fiscal year 2011 and the depreciation and amortization expense will be in the region of Euro 430 million.

MEASURES AFFECTING COSTS AND LEVELS OF INVESTMENT

Infineon's medium-term to long-term growth prospects remain positive thanks to the focus on products needed in the fields of energy efficiency, mobility and security. The expansion of development, selling and manufacturing capacities in recent quarters means that Infineon can react at any time to increases in demand by raising production volumes. The benefits of this strategy will, however, only be seen once production volumes, and hence sales revenue, increase significantly.

Due to uncertainties in the state of the global economy, current and near-term foreseeable sales revenue levels are significantly lower than originally forecasted. As a consequence, the Segment Result Margin is currently below the target of 15 percent averaged over the full economic cycle. Nevertheless, RoCE stands at 20 percent and is thus still higher than the Company's cost of capital. The Management Board has now initiated measures to safeguard the margin even if sales revenue only grows at a modest pace. Worldwide headcount was frozen starting in July. In addition, investments planned for the 2013 fiscal year are to be reduced sharply compared to the original plan and will be significantly lower than in the 2012 fiscal year. The Management Board continues to observe demand and revenue trends very closely and is evaluating further measures.

CHANGE AT CEO LEVEL

As announced on May 13, 2012, Peter Bauer will stand down from his position as Chief Executive Officer at the end of the current fiscal year for health reasons and at his own request. His successor will be his current board colleague, Dr. Reinhard Ploss.

'With effect from October 1, 2012, I will be handing over the reins in the Executive Board to my long-serving colleague Dr. Reinhard Ploss. Over the past four years, we have worked together to restructure the Company and laid the basis for future growth by focusing on products and services in the fields of energy efficiency, mobility and security', commented Peter Bauer. 'Investments in recent quarters now mean that Infineon can react very quickly to any rise in customer demand, which will enable it to win market share as soon as the global economy picks up. I wish my successor and the Company every success on the next part of the journey and thank employees, customers and investors for their trust over the years', continued Bauer'.

Infineon segments' performance in the third quarter of 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 AND PRESS TELEPHONE CONFERENCES

Infineon Technologies AG will hold a telephone conference for analysts and investors (in English only) on July 31, 2012 at 10.00 am (CEST), 4:00 a.m. (US EDT), during which Infineon's third-quarter performance will be presented. In addition, a telephone press conference with the Management Board will take place at 11.30 am (CEST), 5:30 a.m. (US EDT). This conference will be transmitted, in both German and English, over the Internet. The conferences will be available live and as downloads on Infineon's website at www.infineon.com/investor .

The Q3 Investor Presentation is available (in English) at: http://www.infineon.com/cms/en/corporate/investor/reporting/index.html

INFINEON FINANCIAL CALENDAR (*preliminary)

– Aug 29, 2012 Commerzbank Sector Conference Week, Frankfurt

– Sep 26, 2012 Baader Investment Conference, Munich

– Nov 14, 2012* Earnings Release for the Fourth Quarter and Full 2012 Fiscal Year

– 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

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 26,000 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:	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

End of News	DGAP News-Service

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