Infineon Reports Above-Average Seasonal Revenue Growth

Higher earnings driven by strong demand in automotive, industrial and power supply markets

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Infineon Technologies AG has reported results for Q2 2017 period ended 31 March 2017) with revenue of €1,767 million, growing 7 percent from €1,645 million quarter-on-quarter.

The Automotive (ATV), Industrial Power Control (IPC) and Power Management & Multimarket (PMM) segments all contributed to revenue growth, whereas revenue reported by the Chip Card & Security segment (CCS) was down slightly.

“The favourable market development we saw in the first quarter of the fiscal year has continued into the second three-month period. Current order situation gives us good reason for optimism and we have raised our forecast for the full year,” said Reinhard Ploss (above), CEO of Infineon.

He added: “Apart from a continuation of our outstanding performance in the automotive sector, demand for solutions for industrial applications, power supplies and homeappliances is also gathering pace. We are particularly pleased with the positive customer feedback on our SiC MOSFET. This is a clear sign that we are pursuing the right strategy concerning compound semiconductors.”

The second-quarter gross margin was 36.5 percent, compared with 36.0 percent in the previous quarter. These figures include acquisition-related depreciation and amortisation as well as other expenses attributable to the International Rectifier acquisition totaling €25 million. The adjusted gross margin came in at 38.0 percent, up from 37.6 percent one quarter earlier.

Segment Result increased by 20 percent from €246 million to €296 million quarter-on-quarter. The Segment Result Margin improved to 16.8 percent, compared with 15.0 percent in the previous quarter.

The non-segment result was a net loss of €67 million, compared with a net loss of €62 million in the previous quarter. Of the second-quarter figure, €26 million related to the cost of goods sold, €24 million to selling, general and administrative expenses and €0 million to research and development expenses. In addition, other operating income and other operating expenses amounted to a net expense of €17 million, which includes primarily expenses arising in conjunction with the termination of the planned acquisition of Wolfspeed.

Operating income in the second quarter of the current fiscal year increased to €229 million, compared with €184 million in the previous quarter. Income from continuing operations improved from €165 million to €198 million quarter-on-quarter. Income from discontinued operations amounted to €1 million, compared with a loss of €4 million in the preceding quarter.

Net income for the three-month period improved from €161 million to €199 million. The amount reported for the second quarter is stated after an income tax expense of €20 million, compared with a tax expense of €2 million in the first quarter.

Earnings per share for the second quarter of the current fiscal year increased to €0.18, up from €0.14 one quarter earlier (basic and diluted). Adjusted earnings per share (diluted) amounted to €0.21, compared with €0.17 in the previous quarter.

Outlook for Q3 2017 fiscal year

In the third quarter of the 2017 fiscal year, Infineon expects quarter-on-quarter revenue growth of 3 percent (plus or minus 2 percentage points). This forecast is based on an assumed exchange rate of US$ 1.10 to the euro. At the mid-point of the revenue guidance, the Segment Result Margin is expected to come in at 17.5 percent.

Outlook for 2017 fiscal year

In line with the ad hoc notification made on 24 March 2017 of an increased outlook for the 2017 fiscal year, Infineon expects year-on-year revenue growth of 8 to 11 percent, with a Segment Result Margin of approximately 17 percent at the mid-point of the revenue guidance.

The outlook is based on an assumed EUR/USD exchange rate of 1.10. ATV segment revenue is expected to grow faster than the group average. Growth in the IPC segment is forecast to be roughly in line with or slightly lower than the group average. The PMM and CCS segments are both expected to report growth rates below the group average.