Ad-hoc | 24 January 2005 07:33

Infineon Technologies AG: Results for first quarter of financial year 2005

Ad hoc announcement §15 WpHG Quarterly Results and Outlook Infineon Technologies AG: Results for first quarter of financial year 2005 Ad hoc announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Infineon reports results for first quarter of financial year 2005 and provides outlook for the second quarter FIRST QUARTER 2005 RESULTS (October 1 to December 31, 2004) In Euro million Q1 FY05 Q4 FY04 +/- Q1 FY04 +/- Revenues 1,816 1,993 -9% 1,623 +12% Net income 142 44 +++ 34 +++ EBIT 211 113 +87% 70 +++ Earnings per share (EUR) 0.19 0.06 +++ 0.05 +++ Munich, January 24, 2005. First quarter revenues were Euro 1.82 billion, down 9 percent sequentially, reflecting reduced sales volumes in all segments. Sales volumes in the three logic segments declined mainly due to lower demand driven by inventory corrections by customers. Although bit production increased slightly in the Memory Products segment, overall sales volumes declined. The segment has increased inventory levels back to normal levels to serve customers more efficiently and flexibly in the future. Net income in the first quarter was Euro 142 million, up from net income of Euro 44 million sequentially. Basic and diluted earnings per share was Euro 0.19, compared to earnings per share of Euro 0.06 in the previous quarter. EBIT increased to Euro 211 million from Euro 113 million in the prior quarter. Excluding the impact of non-recurring license income of Euro 118 million resulting from the settlement with ProMOS in the first quarter and the impact of impairment and antitrust related charges of Euro 132 million in the prior quarter, EBIT declined in all segments except the Wireline Communications segment. The company’s comparable EBIT decrease was primarily driven by lower sales volumes, and lower fab utilization in the Secure Mobile Solutions and Automotive & Industrial segments. Results were also negatively impacted by the decline of the US dollar. OUTLOOK FOR THE SECOND QUARTER OF FINANCIAL YEAR 2005 Based on the ordering behavior of Infineon’s customers and forecasts of market research institutes, Infineon anticipates a continued slowdown in demand in the overall worldwide semiconductor market during the second quarter of financial year 2005. Due to seasonal effects, pricing pressure in all of the company’s application segments, and a further decline in demand as customers continue to adjust inventory, the company expects revenues and earnings in the current quarter to decline further, especially in the Secure Mobile Solutions Business Group. Infineon Technologies AG St.-Martin-Str. 53 81669 München Deutschland ISIN: DE0006231004 WKN: 623100 Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart; NYSE End of ad hoc announcement (c)DGAP 24.01.2005 Issuer’s information/explanatory remarks concerning this ad hoc announcement: “While many of the measures we have taken to improve our competitiveness are a real challenge for our company in the short term, they are necessary in order to secure our mid and long term future,” commented Dr. Ziebart. “We have further tightened the control on cost, investment and working capital and have identified fixed cost reductions of Euro 200 million for the 2005 financial year compared to the original plan.” BUSINESS GROUPS’ OUTLOOK FOR THE SECOND QUARTER OF FINANCIAL YEAR 2005 Automotive & Industrial: In the automotive industry, Infineon sees no major market changes in the worldwide demand for semiconductors. Due to seasonal effects, the company expects a weaker development in its Industrial segment. Since most of the segment’s necessary inventory reductions have been completed, Infineon expects no further deterioration in fab utilization in the Automotive & Industrial segment. Overall, Infineon anticipates revenues in the second quarter of financial year 2005 to increase slightly. However, earnings are expected to decrease slightly due to the annual price reductions in the automotive business. Wireline Communications: Despite ongoing pricing pressure, slightly decreasing inventory levels at customers, and declining demand in traditional telecom, Infineon expects revenues and operating losses in the second quarter of financial year 2005 to remain stable. In addition, the company is currently in the process of evaluating the impact that the termination of the agreement with Finisar Corporation and the related planned restructuring of the Fiber Optics business will have on the financial position and results of operations of the company in future periods. Secure Mobile Solutions: Due to the usual seasonal slowdown of the mobile phone market in the first quarter of the calendar year in combination with lower orders compared to the first quarter of last financial year, Infineon anticipates a continuing weak development of sales volumes in the second quarter of financial year 2005. Because of the anticipated continuing pricing pressure and lower sales volumes, the company expects a further decrease in revenues exceeding the decline of the prior quarter. The company intends to reduce inventories during the second quarter by further reducing production volumes. Average capacity utilization will continue to decline and is anticipated to result in a significantly stronger decline of EBIT margin than in the previous quarter. Memory Products: For the second quarter of financial year 2005, Infineon expects a seasonal reduction in DRAM prices. Bit production is expected to increase based on additional volumes from the Inotera joint venture. In addition, Infineon anticipates an increase in the number of chips sourced from its foundry partners. The company will continue to focus on the reduction of cost per produced bit and the extension of its product portfolio with higher margin products. DISCLAIMER 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, and our ability to achieve our cost savings and growth targets. 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, the outcome of antitrust investigations and litigation matters, 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 (c)DGAP 240733 Jän 05