Corporate | 31 January 2018 07:30

Infineon Technologies AG: INFINEON DEFIES WEAKER US$ WITH STRONG MOMENTUM: FISCAL FIRST QUARTER PROFITABILITY BETTER THAN EXPECTED

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

31.01.2018 / 07:30
The issuer is solely responsible for the content of this announcement.

– Q1 FY 2018: REVENUE OF EUR1,775 MILLION; SEGMENT RESULT EUR283 MILLION; SEGMENT RESULT MARGIN 15.9 PERCENT; EARNINGS PER SHARE EUR0.18 (BASIC AND DILUTED); ADJUSTED EARNINGS PER SHARE EUR0.20 (DILUTED); GROSS MARGIN 36.4 PERCENT, ADJUSTED GROSS MARGIN 37.4 PERCENT

– OUTLOOK FOR FY 2018: ONLY DUE TO THE WEAKER US$ BASED ON AN ASSUMED EXCHANGE RATE OF US$ 1.25 TO THE EURO FOR THE REMAINDER OF THE FISCAL YEAR, YEAR-ON-YEAR REVENUE GROWTH OF ABOUT 5 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) AND SEGMENT RESULT MARGIN OF 16,5 PERCENT AT MID-POINT OF REVENUE GUIDANCE

– OUTLOOK FOR Q2 FY 2018: QUARTER-ON-QUARTER REVENUE GROWTH OF 4 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) AND SEGMENT RESULT MARGIN OF 16 PERCENT AT MID-POINT OF REVENUE GUIDANCE

Neubiberg, Germany, 31 January 2018 – Infineon Technologies AG today reported its results for the first quarter of the 2018 fiscal year (period ended 31 December 2017).

“Infineon has made a strong start to the new fiscal year,” stated Dr. Reinhard Ploss, CEO of Infineon. “Earnings and margin were better than forecast – despite the expected slight seasonal dip in revenues. The market for electro-mobility continues to drive growth. Infineon offers solutions for the entire range of drivetrain systems from hybrid to pure electric vehicles. Moreover, we continue to benefit from excellent market conditions, which are driving high demand for power components used in applications across the board, such as solar power plants, especially in China, and also for data centers. Operationally we are fully on track. We could still defy the headwind from the weaker US$ in the fiscal first quarter. Adjusted for the depreciation of the US$ from 1.15 to 1.25, our revenue momentum is unchanged, in terms of the Segment Result Margin even slightly better. However, we are unable to compensate a further depreciation of the US$ by another 8 percentage points, which negatively affects more than half of our revenues. As such, we currency-adjusted our outlook accordingly.”

Euro in millions	Q1 FY18	Q4 FY17	+/- in %

Revenue	1,775	1,820	(2)
Segment Result	283	328	(14)
Segment Result Margin	15.9%	18.0%
Income (loss) from continuing operations	206	177	16
Income (loss) from discontinued operations, net of income taxes	(1)	(1)	–
Net income	205	176	16

in Euro
Basic earnings (loss) per share from continuing operations ¹	0.18	0.16	13
Basic earnings (loss) per share from discontinued operations ¹	–	–	+++
Basic earnings per share ¹	0.18	0.16	13

Diluted earnings (loss) per share from continuing operations ¹	0.18	0.16	13
Diluted earnings (loss) per share from discontinued operations ¹	–	–	+++
Diluted earnings per share ¹	0.18	0.16	13

Adjusted earnings per share diluted ²	0.20	0.22	(9)

Gross margin	36.4%	37.5%
Adjusted gross margin ²	37.4%	38.6%

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 FIRST QUARTER OF THE 2018 FISCAL YEAR
Compared to the preceding quarter, revenue declined by 2 percent to EUR1,775 million in the first quarter of the 2018 fiscal year. Revenue in the previous quarter had amounted to EUR1,820 million. Compared to the first quarter of the 2017 fiscal year, revenues increased by 8 percent. The Industrial Power Control (IPC), Power Management & Multimarket (PMM) and Chip Card & Security (CCS) segments all reported seasonal decreases, whereas the Automotive segment (ATV) recorded seasonally atypical revenue growth in line with expectations.

The gross margin in the first quarter came in at 36.4 percent, compared to 37.5 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 EUR17 million. The adjusted gross margin came in at 37.4 percent, compared with 38.6 percent in the preceding quarter.

The first-quarter Segment Result amounted to EUR283 million, compared to EUR328 million in the fourth quarter of the previous fiscal year, with the Segment Result Margin declining from 18.0 percent to 15.9 percent.

The first-quarter non-segment result improved to a net loss of EUR35 million, compared to the net loss of EUR56 million reported for the preceding quarter. Of the first-quarter figure, EUR18 million related to the cost of goods sold, EUR16 million to selling, general and administrative expenses and EUR1 million to research and development expenses. The non-segment result for the first quarter includes EUR30 million of depreciation and amortization arising in conjunction with the purchase price allocation and other expenses for post-merger integration measures relating to International Rectifier.

Operating income for the first quarter totaled EUR248 million, compared to EUR272 million in the preceding quarter. Income from continuing operations for the three-month period improved to EUR206 million. The corresponding figure for the previous quarter had been EUR177 million. Income from discontinued operations remained stable at a negative amount of EUR1 million. Net income increased from EUR176 million to EUR205 million quarter-on-quarter. The first-quarter income tax expense amounted to EUR28 million, significantly lower than the tax expense of EUR84 million reported for the fourth quarter.

Earnings per share improved quarter-on-quarter from EUR0.16 to EUR0.18 (basic and diluted in each case). Adjusted earnings per share ³ (diluted) amounted to EUR0.20, compared to EUR0.22 in the fourth 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 costs – amounted to EUR293 million in the first quarter of the 2018 fiscal year, compared to EUR370 million in the preceding three-month period. Depreciation and amortization remained almost unchanged at EUR204 million, compared to the previous quarter’s EUR205 million.

First-quarter free cash flow from continuing operations was a negative amount of EUR135 million, compared to a positive amount of EUR249 million one quarter earlier. Net cash provided by operating activities from continuing operations amounted to EUR158 million, compared to the previous quarter’s EUR616 million.

The gross cash position at the end of the first quarter of the 2018 fiscal year amounted to EUR2,312 million, compared to EUR2,452 million at 30 September 2017. The net cash position amounted to EUR503 million, compared to EUR618 million three months earlier.

Provisions relating to Qimonda decreased from EUR33 million at 30 September 2017 to EUR32 million at 31 December 2017. These provisions are recognized for legal costs in conjunction with the defense against claims made by the Qimonda insolvency administrator and for residual liabilities related to Qimonda Dresden GmbH & Co. OHG.

OUTLOOK FOR THE SECOND QUARTER OF THE 2018 FISCAL YEAR
In the second quarter of the 2018 fiscal year, Infineon expects a quarter-on-quarter revenue increase of 4 percent (plus or minus 2 percentage points). The forecast is based on an assumed exchange rate of US$1.25 to the euro for the remainder of the quarter. At the mid-point of revenue guidance, the Segment Result Margin is expected to come in at 16 percent.

OUTLOOK FOR 2018 FISCAL YEAR
Based on an assumed exchange rate of US$1.25 to the euro for the remaining fiscal year (previously assumed: US$1.15), Infineon forecasts year-on-year revenue growth of about 5 percent (plus or minus 2 percentage points) for the remainder of the 2018 fiscal year. Previously, an increase of about 9 percent (plus or minus 2 percentage points) had been expected. The average EUR/US$ exchange rate during the 2017 fiscal year was 1.11 and thus more favorable for Infineon’s revenue and earnings performance than the exchange rate of 1.25 assumed from now on. At an unchanged exchange rate of 1.11, expected year-on-year growth would be significantly higher and within the double-digit percentage range. At the mid-point of revenue guidance – even based on the newly assumed EUR/US$ exchange rate of 1.25 from now on compared to the previous 1.15 – the Segment Result Margin is predicted to come in at 16.5 percent. The ATV segment is expected to grow at a significantly faster pace than the Group average. The IPC segment is expected to grow roughly in line with Group average. The PMM segment is forecast to report a growth rate below the Group average. Given the difficult market situation and the strong depreciation of the US$, a decline in revenue is predicted for the CCS segment.

Investments in property, plant and equipment, intangible assets and capitalized development costs totaling between EUR1.1 and EUR1.2 billion are planned for the 2018 fiscal year. The ratio of investments to revenue at the mid-point of revenue guidance for the 2018 fiscal year should therefore be about 15 percent and hence above the target level of 13 percent of revenue. This development reflects high investments in additional manufacturing capacities, especially for electro-mobility products, which, along with other lines of business, are expected to see growing demand. Depreciation and amortization is expected to be in the region of EUR880 million.

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 first quarter of the 2018 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 31 January 2018 at 9:30 am (CET), 3:30 am (EST). During the call, the Infineon Management Board will present the Company’s results for the first quarter of the 2018 fiscal year. In addition, the Management Board will host a telephone conference with the media at 11:00 am (CET), 5:00 am (EST). 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 Q1 Investor Presentation is available (in English only) at: http://www.infineon.com/cms/en/corporate/investor/reporting/

INFINEON FINANCIAL CALENDAR (* preliminary)

– 22 Feb 2018 Annual General Meeting 2018, Munich

– 26 – 28 Feb 2018 Mobile World Congress, Barcelona

– 3 May 2018* Earnings Release for the Second Quarter of the 2018 Fiscal Year

– 12 June 2018 Capital Markets Day “IFX Day 2018”, London

– 1 Aug 2018* Earnings Release for the Third Quarter of the 2018 Fiscal Year

– 30 Aug 2018 Commerzbank Sector Conference, Frankfurt

– 24 Sept 2018 Berenberg and Goldman Sachs 7th German Corporate Conference, Unterschleißheim nearby Munich

– 25 Sept 2018 Baader Investment Conference, Munich

– 12 Nov 2018* Earnings Release for the Fourth Quarter and the 2018 Fiscal Year

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 2017 fiscal year (ending 30 September), the Company reported sales of around EUR7.1 billion with about 37,500 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

D I S C L A I M E R

This press release is a Quarterly Group Statement according the Frankfurt Stock Exchange’s stock exchange regulation 53 paragraph.

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

31.01.2018 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.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de

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