Ad-hoc | 23 July 2001 08:31

Infineon Technologies AG English

Ad hoc-announcement edited and send by DGAP. The sender is responsible for the contents of this announcement. —————————————————————————— Infineon Announces 3rd-Quarter and 9-Months Results 2001 (ended June 30) T H I R D Q U A R T E R R E S U L T S (April 1 to June 30, 2001) The semiconductor manufacturing group Infineon Technologies AG, Munich, today announced results for its third quarter in fiscal year 2001 (ended June 30) with revenues of Euro 1.28 billion, a decrease of 30 percent year-on-year and of 23 percent from the previous quarter of this fiscal year. Revenues declined in the Wireline and Wireless Communications, Security & Chip Card ICs and Memory Products businesses compared to the previous quarter. Weaker demand, lower product prices and order cancellations affected each of these segments, while Infineon’s Automotive and Industrial electronics business remained strong. EBIT (earnings before interest and tax) decreased to a loss of Euro 598 million, down from a positive EBIT of Euro 366 million in the same quarter last year and down from a positive EBIT of Euro 10 million in the second quarter of this year. Infineon’s loss was caused by strong price erosion, especially for memory products, and costs of carrying currently unused capacity in most segments. The loss also reflects charges of Euro 209 million in connection with inventory write-downs in all segments other than Automotive & Industrial, Euro 30 million of acquisition related expenses, and Euro 21 million related to investments in a research and development venture. Without these charges and expenses, EBIT amounted to a loss of Euro 338 million. Net income in the third quarter decreased to a loss of Euro 371 million, down Euro 637 million from the same quarter of the last fiscal year and down Euro 394 million from the previous quarter of this year. Loss per share for the third quarter was Euro 0.59 as compared with earnings per share of Euro 0.43 in the third quarter of the last fiscal year and earnings per share of Euro 0.04 in the second quarter of this year. Issuer’s information/explanation remarks concerning this ad hoc announcement: Excluding the effect of the inventory write-downs Infineon achieved a gross margin of 16 percent. Including this effect Infineon reached a negative gross margin of 1 percent, down from 28 percent in the second quarter of this year and 41 percent in the third quarter of fiscal year 2000. F I R S T N I N E M O N T H S R E S U L T S (October 1, 2000, to June 30, 2001) Revenues for the first nine months of fiscal year 2001 amounted to Euro 4.59 billion, down 6 percent from Euro 4.90 billion in the same period last year. EBIT for the first nine months of this year decreased to a loss of Euro 142 million, down from positive earnings of Euro 863 million for the same period last year. Net loss was Euro 68 million, down from a net income of Euro 545 million for the same period last year. “Infineon has managed to grow faster than the market in the first half of the fiscal year with a 37 percent revenues growth in our non-memory businesses based on our strong position in system solutions despite an increasingly difficult market environment. However, market conditions significantly deteriorated in the third quarter and finally had a negative impact on Infineon’s overall business”, commented Dr. Ulrich Schumacher, President and CEO of Infineon Technologies AG. “Our balanced product portfolio did not help to ease the current weakness in the memory market any longer. This dynamic development and the magnitude of the current downturn, especially in communications, was not expected.” O U T L O O K F O R 2 0 0 1 During the third quarter market conditions in the semiconductor industry further deteriorated. Most leading market analysts currently predict a negative growth rate of 20 to 30 percent for calendar year 2001. Visibility for the market development in the second half of calendar year 2001 remains low and there are no clear signs of a market recovery in the coming months. Due to the current negative market conditions Infineon expects to incur a net loss in the fourth quarter as well as a loss for its fiscal year 2001. Market conditions for memory products remain difficult. Weak demand, especially in the PC market, has led to significantly higher inventory levels at memory producers. Even though Infineon’s inventory levels have stabilized towards the end of the quarter, the company expects a continued low price level for memory products during the next quarter. The mobile handset market further deteriorated during the third quarter of fiscal year 2001. Although Infineon expects a reduction of the high inventory levels with regard to the Christmas business the company currently sees no clear signs of recovery in mobile phone demand. Infineon also expects that the current downturn of the semiconductor market, coupled with the slowdown of the global economy, especially in the United States, will continue to negatively affect Infineon’s Wireline Communications and Security & Chip Card IC businesses. However, Infineon expects its Automotive & Industrial components business to continue to benefit from a strong customer base as well as from the ongoing industry trend towards more advanced automotive electronics. Infineon has already implemented a range of measures to mitigate the financial impact of the current downturn of the market, such as the reduction of capital expenditures by Euro 500 million to Euro 2.3 billion for the current fiscal year and by more than one billion Euro for fiscal year 2002, as well as implementing cost reduction programs including a hiring freeze. Infineon intends to use the proceeds of approximately Euro 1.5 billion from its recent public offering to fund future capital expenditures and potential acquisitions as well as for working capital and other corporate purposes. “Our public offering, in combination with our reduction of planned capital expenditures for the current and next fiscal year and the cost cutting measures we have implemented, will enable us to continue to fund cutting edge research and development as well as to implement our aggressive productivity roadmap, especially our leadership in 300mm technology”, concluded Dr. Schumacher. “With these measures, we will be in a strong competitive position to benefit from any upturn in the semiconductor industry.” D I S C L A I M E R This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structures, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our growth targets, and the continuation of current developments in our financial results in the current and future financial periods. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements. End of Message