Infineon Technologies AG

  • WKN: 623100
  • ISIN: DE0006231004
  • Land: Deutschland

Nachricht vom 01.08.2019 | 07:30

Infineon Technologies AG: INFINEON PERFORMS WELL IN CHALLENGING MARKET ENVIRONMENT - REVENUE AND EARNINGS MEET EXPECTATIONS

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

01.08.2019 / 07:30
The issuer is solely responsible for the content of this announcement.


 

- Q3 FY 2019: REVENUE OF EUR2,015 MILLION; SEGMENT RESULT OF EUR317 MILLION; SEGMENT RESULT MARGIN OF 15.7 PERCENT

- OUTLOOK FOR Q4 FY 2019: BASED ON AN ASSUMED EXCHANGE RATE OF US$ 1.15 TO THE EURO, REVENUE IS EXPECTED TO GROW BY 1 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) QUARTER-ON-QUARTER. AT THE MID-POINT OF THE REVENUE GUIDANCE, THE SEGMENT RESULT MARGIN IS EXPECTED TO COME IN AT AROUND 14.5 PERCENT

- OUTLOOK FOR FY 2019 CONFIRMED: REVENUE OF EUR8 BILLION WITH A
SEGMENT RESULT MARGIN OF 16 PERCENT

- ACQUISITION OF CYPRESS AT AN ENTERPRISE VALUE OF EUR9 BILLION ANNOUNCED; INITIAL FINANCING STEPS SUCCESSFULLY COMPLETED WITH CAPITAL INCREASE OF EUR1.5 BILLION AND SYNDICATION OF ACQUISITION FINANCING

Neubiberg, Germany, 1 August 2019 - Infineon Technologies AG is today reporting results for the third quarter of the 2019 fiscal year (period ended 30 June 2019).

"Infineon remains on course. Although the global economy remains sluggish, Group revenue again grew in the third quarter," stated Dr. Reinhard Ploss, CEO of Infineon. "Demand was solid overall, despite the lack of significant growth momentum. Regardless of the ongoing unfavorable macroeconomic conditions, we still expect to achieve our targets for the current fiscal year. The underlying drivers of our future markets are very much intact and continue to provide good long-term growth prospects to Infineon."

Euro in millions Q3 FY19 Q2 FY19 +/- in %
       
Revenue 2,015 1,983 2
Segment Result 317 332 (5)
Segment Result Margin 15.7% 16.7%  
Income (loss) from continuing operations 224 249 (10)
Income (loss) from discontinued operations, net of income taxes - (18) +++
Net income 224 231 (3)
       
in Euro      
Basic earnings (loss) per share from continuing operations1 0.20 0.22 (9)
Basic earnings (loss) per share from discontinued operations1 - (0.02) +++
Basic earnings per share1 0.20 0.20 -
       
Diluted earnings (loss) per share from continuing operations1 0.20 0.22 (9)
Diluted earnings (loss) per share from discontinued operations1 - (0.02) +++
Diluted earnings per share1 0.20 0.20 -
       
Adjusted earnings per share diluted2 0.23 0.24 (4)
       
Gross margin 36.5% 37.8%  
Adjusted gross margin2 37.2% 38.5%  
 

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.

With effect from the beginning of 2019 fiscal year, Infineon is applying IFRS 15 (Revenue from Contracts with Customers) and IFRS 9 (Financial Instruments) using the modified retrospective approach. As a result, prior periods are not adjusted to the new accounting policies. Overall, the first-time application of these Standards has not had any material impact.

GROUP PERFORMANCE IN THE THIRD QUARTER OF THE 2019 FISCAL YEAR
In the third quarter of the 2019 fiscal year, revenue grew by 2 percent from EUR1,983 million to EUR2,015 million quarter-on-quarter. The slightly stronger US dollar compared to the second quarter had a positive impact. All four segments - Automotive (ATV), Industrial Power Control (IPC), Power Management & Multimarket (PMM) and Digital Security Solutions (DSS) - contributed to growth with slightly higher revenue figures.

The third-quarter gross margin was 36.5 percent, compared to 37.8 percent in the second quarter. Included therein are acquisition-related depreciation and amortization as well as other expenses totaling EUR14 million, mainly relating to the previous acquisition of International Rectifier. The adjusted gross margin decreased from 38.5 percent to 37.2 percent quarter-on-quarter. Segment Result amounted to EUR317 million, compared to EUR332 million for the preceding three-month period. The Segment Result Margin went from 16.7 percent to 15.7 percent quarter-on-quarter.

The non-segment result for the three-month period under report was a net loss of EUR34 million, compared to a net loss of EUR27 million in the previous quarter. The third-quarter non-segment result included EUR14 million of cost of goods sold, EUR13 million of selling, general and administrative expenses, and EUR1 million of research and development expenses. In addition, net operating expense amounting to EUR6 million were incurred in connection with the planned acquisition of Cypress Semiconductor Corporation ("Cypress"), USA.

Operating income for the third quarter of the 2019 fiscal year amounted to EUR283 million, compared to the second-quarter figure of EUR305 million.

The financial result reported for the third quarter was a net expense of EUR31 million. This figure includes EUR22 million of costs incurred to hedge stockmarket related risks for the capital increase in connection with the financing of the planned acquisition of Cypress. In the previous quarter, the financial result had amounted to a net expense of EUR9 million.

Income tax expense for the three-month period under report decreased from EUR46 million to EUR28 million quarter-on-quarter.

Income from continuing operations went from EUR249 million to EUR224 million quarter-on-quarter. Net income for the third quarter also amounted to EUR224 million. Second-quarter net income of EUR231 million included a negative result from discontinued operations of EUR18 million. Income from discontinued operations broke even in the third quarter.

Earnings per share from continuing operations for the third quarter of the current fiscal year amounted to EUR0.20 (basic and diluted), compared to EUR0.22 in the previous quarter. Adjusted earnings per share3 (diluted) for the three-month period under report amounted to EUR0.23, compared to EUR0.24 in the second quarter.

Investments - which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets, and capitalized development costs - amounted to EUR344 million in the third quarter and were thus slightly down on the preceding quarter's figure of EUR349 million. Depreciation and amortization slightly increased from EUR233 million to EUR238 million quarter-on-quarter.

Free cash flow from continuing operations improved from a negative amount of EUR137 million to a positive EUR63 million in the third quarter of the 2019 fiscal year. Net cash provided by operating activities from continuing operations in the third quarter amounted to EUR396 million, up from EUR215 million in the second quarter.

The gross cash position at the end of the third quarter of the 2019 fiscal year amounted to EUR3,435 million, compared to EUR1,882 million at 31 March 2019. The net cash position improved from EUR333 million to EUR1,900 million. Both figures include the proceeds of EUR1.5 billion resulting from the capital increase executed on 18 June 2019 in connection with the planned acquisition of Cypress.

In order to hedge against exchange rate risks relating to the purchase price obligation arising in connection with the planned acquisition of Cypress, deal-contingent EUR/USD contracts were concluded. In this context, cash flow hedges were accounted for that reduced equity by EUR95 million at the end of the third quarter of the 2019 fiscal year without income statement impact.

PLANNED ACQUISITION OF CYPRESS
On 3 June 2019, Infineon and Cypress signed an agreement for the purchase of Cypress. Infineon intends to acquire Cypress for a cash price of USD 23.85 per share, corresponding to an enterprise value of EUR9 billion.

"The planned acquisition of Cypress is a landmark step in Infineon's strategic development. With this transaction, Infineon is entering a new dimension," commented Dr. Reinhard Ploss, CEO of Infineon. "The Infineon and Cypress portfolios complement each other ideally. The acquisition will enable us to strengthen our core power semiconductor business in the long term. With Cypress, Infineon will be able to gain an even stronger foothold in important future markets and accelerate the pace of growth."

Infineon's Supervisory Board and Cypress's Board of Directors have already approved the proposed transaction. Completion of the transaction is subject to approval by Cypress shareholders and regulatory approvals in the relevant jurisdictions as well as to customary closing conditions. The transaction is expected to close towards the end of the 2019 calendar year or early in 2020.

Initially, a small group of banks had provided binding loan commitments to finance the transaction. The ultimate financing structure is oriented towards maintaining an investment grade rating. Infineon therefore intends to finance approximately 30 percent of the transaction using equity capital. The remainder will be raised through debt instruments and available cash. In view of the equity portion, a capital increase against cash contribution was carried out on 18 June 2019. Approximately 113 million new shares were issued and net proceeds of EUR1.5 billion raised. Following this step, the remaining acquisition financing has meanwhile been successfully syndicated among a larger consortium of banks.

OUTLOOK FOR THE FOURTH QUARTER OF THE 2019 FISCAL YEAR
Based on an assumed exchange rate of US$ 1.15 to the euro in the fourth quarter of the 2019 fiscal year, Infineon expects revenue to grow by 1 percent quarter-on-quarter (plus or minus 2 percentage points). The Power Management & Multimarket segment is expected to grow faster than the average for the Group as a whole. Automotive segment revenue is forecast to grow roughly in line with the Group, whereas the Industrial Power Control and Digital Security Solutions segments are predicted to report a low single-digit decrease in revenue. At the mid-point of the revenue guidance, the Segment Result Margin is expected to come in at 14.5 percent.

OUTLOOK FOR THE 2019 FISCAL YEAR
Based on the first three quarters and expectations for the fourth quarter, Infineon confirms its revenue expectation of EUR8.0 billion for the 2019 fiscal year. Revenue in the previous fiscal year totaled EUR7.6 billion. Revenue is therefore likely to grow by a bit above 5 percent year-on-year. This forecast is based on an assumed EUR/USD exchange rate of 1.15. The Segment Result Margin is expected to come in at 16 percent.

Investments in property, plant and equipment, intangible assets and capitalized development costs in the 2019 fiscal year are planned at approximately EUR1.5 billion. The figure includes expenditure for the cleanroom currently being constructed for the new 300-millimeter production facility in Villach. Depreciation and amortization will be in the region of EUR1 billion, whereby approximately EUR90 million of that amount relates to amortization resulting from purchase price allocations, primarily for International Rectifier.

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 2019 fiscal year can be found in the quarterly information at www.infineon.com.

All figures in this quarterly information are preliminary and unaudited.

ANALYST TELEPHONE CONFERENCE AND PRESS TELEPHONE CONFERENCE
Infineon will host a telephone conference call including a webcast for analysts and investors (in English only) on 1 August 2019 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 and the outlook for the fourth quarter of the 2019 fiscal year as well as for the 2019 fiscal year. In addition, the Management Board will host a telephone press 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:
https://www.infineon.com/cms/en/about-infineon/investor/reporting/quarterly-financial-results/

INFINEON FINANCIAL CALENDAR (* preliminary)

- 29 Aug 2019 Commerzbank Sector Conference, Frankfurt

- 4 - 5 Sep 2019 Citi Global Technology Conference, New York

- 6 Sep 2019 Deutsche Bank European TMT Conference, London

- 23 Sep 2019 Berenberg Goldman Sachs German Corporate Conference, Unterschleißheim nearby Munich

- 24 Sep 2019 Baader Investment Conference, Munich

- 7 Oct 2019 ATV Presentation by Peter Schiefer, Division President ATV, London

- 12 Nov 2019* Earnings Release for the Fourth Quarter and the 2019
Fiscal Year

- 13 - 14 Nov 2019 Morgan Stanley TMT Conference, Barcelona

- 5 Feb 2020* Earnings Release for the First Quarter of the 2020
Fiscal Year

- 20 Feb 2020* Annual General Meeting, Munich

- 5 May 2020* Earnings Release for the Second Quarter of the 2020
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 2018 fiscal year (ending 30 September), the Company reported sales of EUR7.6 billion with about 40.100 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

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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


01.08.2019 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



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