Infineon Technologies AG

Earnings Release • Aug 1, 2017

News Details

Corporate | 1 August 2017 07:30

Infineon Technologies AG: REVENUE GROWTH DRIVEN BY INDUSTRIAL APPLICATIONS AND POWER SUPPLIES. GROWING SEMICONDUCTOR CONTENT PER VEHICLE KEEPS AUTOMOTIVE BUSINESS BUOYANT

DGAP-News: Infineon Technologies AG / Key word(s): Quarterly / Interim Statement/Forecast

01.08.2017 / 07:30

The issuer is solely responsible for the content of this announcement.

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– Q3 FY 2017: REVENUE EUR1,831 MILLION; SEGMENT RESULT EUR338 MILLION; SEGMENT RESULT MARGIN 18.5 PERCENT; EARNINGS PER SHARE EUR0.22 (BASIC AND DILUTED); ADJUSTED EARNINGS PER SHARE EUR0.24 (DILUTED); GROSS MARGIN 38.2 PERCENT, ADJUSTED GROSS MARGIN 39.4 PERCENT

– OUTLOOK FOR Q4 FY 2017: AT AN ASSUMED EXCHANGE RATE OF US$1.15 TO THE EURO EXPECTED REVENUE ABOUT THE SAME LEVEL AS Q3 FY 2017; SEGMENT RESULT MARGIN AT AROUND 18 PERCENT

– UNCHANGED OUTLOOK FOR FY 2017: DESPITE SIGNIFICANT HEADWIND FROM THE WEAKER US DOLLAR IN THE SEPTEMBER QUARTER, YEAR-ON-YEAR REVENUE GROWTH OF 8 TO 11 PERCENT; SEGMENT RESULT MARGIN OF 17 PERCENT AT MID-POINT OF REVENUE GUIDANCE

Neubiberg, Germany, 1 August 2017 – Infineon Technologies AG today reported results for the third quarter of its 2017 fiscal year (period ended 30 June 2017).

“Our forecast has been fully confirmed. The pace of growth in the third quarter was in line with expectations,” said Dr. Reinhard Ploss, CEO of Infineon. “Demand is particularly strong for the power semiconductors we produce for various applications ranging from renewables to data centers. The market for electro-mobility also continues to accelerate. During the nine-month period ended June 2017 we acquired almost twice as much new business in this area for the coming five to ten years as in the entire previous fiscal year. Infineon is a leader in IGBTs for hybrid and electric cars, a technology which will prevail in this application for years to come. We are further expanding our strong position in this market. Overall, we confirm our outlook for the current fiscal year, despite strong headwinds caused by the weaker US dollar.”

Euro in millions	Q3 FY17	Q2 FY17	+/- in %
Revenue	1,831	1,767	4
Segment Result	338	296	14
Segment Result Margin	18.5%	16.8%
Income (loss) from continuing operations	250	198	26
Income (loss) from discontinued operations, net of income taxes	3	1	+++
Net income	253	199	27
in Euro
Basic earnings (loss) per share from continuing operations 1	0.22	0.18	22
Basic earnings (loss) per share from discontinued operations 1	–	–	–
Basic earnings per share 1	0.22	0.18	22
Diluted earnings (loss) per share from continuing operations 1	0.22	0.18	22
Diluted earnings (loss) per share from discontinued operations 1	–	–	–
Diluted earnings per share 1	0.22	0.18	22
Adjusted earnings per share diluted 2	0.24	0.21	14
Gross margin	38.2%	36.5%
Adjusted gross margin 2	39.4%	38.0%

1 The calculation for earnings per share and for adjusted earnings per share is based on unrounded figures.

2 The reconciliation of net income to adjusted net income and adjusted earnings per share as well as of cost of goods sold to adjusted cost of goods sold and adjusted gross margin can be found in the quarterly information at www.infineon.com .

REVIEW OF GROUP FINANCIALS FOR THE THIRD QUARTER OF THE 2017 FISCAL YEAR

In the third quarter of the 2017 fiscal year, revenue grew by 4 percent from EUR1,767 million to EUR1,831 million quarter-on-quarter. The Industrial Power Control (IPC), Power Management & Multimarket (PMM) and Chip Card & Security (CCS) segments all contributed to revenue growth, whereas revenue reported by the Automotive (ATV) segment was slightly down.

The third-quarter gross margin was 38.2 percent, compared with 36.5 percent in the previous quarter. These figures include acquisition-related depreciation and amortization as well as other expenses attributable to the International Rectifier acquisition totaling EUR20 million. The adjusted gross margin came in at 39.4 percent, up from 38.0 percent one quarter earlier.

Segment Result increased by 14 percent from EUR296 million to EUR338 million quarter-on-quarter. The Segment Result Margin improved to 18.5 percent, compared with 16.8 percent in the previous quarter.

The non-segment result in the third quarter was a net loss of EUR40 million, compared with a net loss of EUR67 million reported for the second quarter. Of the third-quarter figure, EUR21 million related to the cost of goods sold, EUR20 million to selling, general and administrative expenses and EUR0 million to research and development expenses. In addition, other operating income and other operating expenses were a net positive amount of EUR1 million. The non-segment result for the second quarter included among others significant expenses arising in conjunction with the termination of the planned acquisition of Wolfspeed.

The non-segment result for the third quarter includes EUR35 million of depreciation and amortization charges arising in conjunction with the purchase price allocation and other expenses for post-merger integration measures relating to the acquisition of International Rectifier.

Operating income in the third quarter of the current fiscal year increased to EUR298 million, compared with EUR229 million in the previous quarter. Income from continuing operations improved from EUR198 million to EUR250 million quarter-on-quarter. Income from discontinued operations amounted to EUR3 million, compared with income of EUR1 million in the preceding quarter. Net income for the three-month period improved from EUR199 million to EUR253 million.

Earnings per share for the third quarter of the current fiscal year increased to EUR0.22, up from EUR0.18 one quarter earlier (in both cases basic and diluted). Adjusted earnings per share 3 (diluted) amounted to EUR0.24, compared with EUR0.21 in the previous quarter. For the purpose of calculating adjusted earnings per share (diluted), a number of items are eliminated, most notably acquisition-related depreciation/amortization and other expenses (net of tax) as well as valuation allowances on deferred tax assets.

Investments – which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized development assets – totaled EUR231 million in the third quarter, compared with EUR219 million in the second quarter. The depreciation and amortization expense amounted to EUR202 million, compared to a second-quarter expense of EUR205 million.

Free cash flow from continuing operations in the third quarter increased to EUR301 million, up from EUR82 million in the preceding quarter. Net cash provided by operating activities from continuing operations climbed from EUR300 million to EUR531 million quarter-on-quarter.

The gross cash position at the end of the third quarter amounted to EUR2,217 million, compared with EUR2,049 million at 31 March 2017. The net cash position increased to EUR358 million, after having stood at EUR32 million three months earlier.

Provisions relating to Qimonda decreased slightly from EUR27 million at 31 March 2017 to EUR24 million at 30 June 2017. They were originally recognized for litigation costs in conjunction with claims made by the Qimonda insolvency administrator and for residual liabilities related to Qimonda Dresden GmbH & Co. OHG.

OUTLOOK FOR THE 2017 FISCAL YEAR

In line with the ad hoc notification published on 24 March 2017 regarding an improved outlook for the 2017 fiscal year, Infineon continues to expect year-on-year revenue growth of 8 to 11 percent, with a Segment Result Margin of approximately 17 percent at the mid-point of revenue guidance, despite a significant headwind from the weaker US dollar. The outlook is now based on an assumed USD/EUR exchange rate of 1.15 for the fourth quarter, compared with the previous assumption of 1.10. ATV and IPC segment revenue is expected to grow faster than the Group average, whereas the PMM and CCS segments are both predicted to report growth rates below the Group average.

Investments in property, plant and equipment, intangible assets and capitalized development assets are currently planned at around EUR1,050 million for the 2017 fiscal year. The figure includes approximately EUR35 million designated for the new office building at Infineon’s headquarters in Neubiberg near Munich. Depreciation and amortization are expected to be about of EUR815 million.

OUTLOOK FOR THE FOURTH QUARTER OF THE 2017 FISCAL YEAR

Based on the full year outlook for the 2017 fiscal year, fourth-quarter revenue is expected to be about the same level as in the previous quarter. The reason for the only stable revenue expectation is the significantly weakening assumed exchange rate of US$1.15 to the euro if compared to the prior quarter. The Segment Result Margin is expected to reach approximately 18 percent.

3 Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior performance indicator, but rather as additional information to the net income and earnings per share (diluted) determined in accordance with IFRS.

Infineon’s segments’ performance in the third quarter of the 2017 fiscal year can be found in the quarterly information at www.infineon.com .

All figures in this quarterly information are preliminary and unaudited.

ANALYST AND PRESS TELEPHONE CONFERENCE

Infineon will host a telephone conference call for analysts and investors (in English only) on 1 August 2017 at 9:30 am (CEST), 3:30 am (EDT). During the call, the Infineon Management Board will present the Company’s results for the third quarter of the 2017 fiscal year. In addition, the Management Board will host a telephone conference with the media at 11:00 am (CEST), 5:00 am (EDT). 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 Q3 Investor Presentation is available (in English only) at: http://www.infineon.com/cms/en/corporate/investor/reporting/

INFINEON FINANCIAL CALENDAR (* preliminary)

– 31 Aug 2017 Commerzbank Sector Conference, Frankfurt

– 6 – 7 Sep 2017 Citi Global Technology Conference, New York

– 18 Sep 2017 Berenberg Bank and Goldman Sachs German Corporate Conference, Munich

– 20 Sep 2017 Baader Investment Conference, Munich

– 28 Sep 2017 Bernstein European Conference, London

– 10 Oct 2017 ATV Presentation by Peter Schiefer, Division President, London

– 14 Nov 2017* Earnings Release for the Fourth Quarter and the 2017 Fiscal Year

– 15 – 16 Nov 2017 Morgan Stanley TMT Conference, Barcelona

–  28 – 29 Nov 2017 Credit Suisse TMT Conference, Scottsdale, Arizona

ABOUT INFINEON

Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener. Microelectronics from Infineon is the key to a better future. In the 2016 fiscal year (ending 30 September), the Company reported sales of about EUR6.5 billion with some 36,300 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).

Further information is available at www.infineon.com

This press release is available online at www.infineon.com/press

Follow us: twitter.com/Infineon – facebook.com/Infineon – plus.google.com/+Infineon

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.

Due to rounding, numbers presented throughout this press release and other reports may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Contact:

Bernd Hops, Media Relations, phone: +49 89 234-24123 , fax: +49 89 234-154123

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01.08.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

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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:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange

End of News	DGAP News Service