Infineon Technologies
Quarter better than expected and raised outlook
Infineon Technologies concludes a significantly better-than-expected quarter and again raises its outlook for the current fiscal year.
»Infineon is performing very well. We are seeing strong growth in our businesses relating to electromobility, renewable energy generation and energy infrastructure. These are precisely the key applications we are serving in terms of the decarbonization,« says Jochen Hanebeck, CEO of Infineon. »Although an improvement in consumer goods markets such as smartphones, PCs and home appliances is not yet visible, we are nevertheless very confident overall about Infineon’s future business performance. We are therefore revising our expectations for revenue and profitability in the current fiscal year upwards, as already announced at the end of March.«
In the second quarter of the 2023 fiscal year, Group revenue was €4,119 million. Compared with revenue in the prior quarter of €3,951 million, this was an increase of 4 percent. Revenue in the Automotive (ATV) and Green Industrial Power (GIP - with effect from 1 April 2023, the "Industrial Power Control" segment was renamed "Green Industrial Power".) segments improved significantly. The Connected Secure Systems (CSS) segment saw a slight increase in revenue, whereas the Power & Sensor Systems (PSS) segment experienced a significant decline as expected. The weaker US dollar compared with the prior quarter had a negative impact on revenue in all segments.
The gross margin in the second quarter of the current fiscal year was 46.6 percent, compared with 47.2 percent in the prior quarter. The adjusted gross margin was 48.6 percent, compared with 49.2 percent in the prior quarter.
The Segment Result increased in the second quarter of the 2023 fiscal year to €1,180 million, from €1,107 million in the prior quarter. The Segment Result Margin was 28.6 percent, compared with 28.0 percent in the first quarter of the current fiscal year.
Operating profit improved in the second quarter of the 2023 fiscal year to €1,073 million, up from €966 million in the previous three-month period.
The financial result in the second quarter of the current fiscal year was a net loss of €17 million, compared with a net loss of €24 million in the first quarter of the 2023 fiscal year.
Profit from continuing operations in the second quarter of the 2023 fiscal year rose to €827 million from €729 million in the preceding quarter. As in the first quarter of the current fiscal year, the result from discontinued operations was a loss of €1 million. The profit for the period improved in the second quarter of the 2023 fiscal year to €826 million, up from €728 million in the prior quarter.
Earnings per share from continuing operations in the second quarter of the 2023 fiscal year increased to €0.63, from €0.55 in the preceding quarter (basic and diluted in each case). Adjusted earnings per share2 (diluted) rose in the second quarter of the current fiscal year to €0.69, from €0.64 in the first quarter of the 2023 fiscal year.
Investments – which Infineon defines as the sum of investments in property, plant and equipment, investments in other intangible assets and capitalized development costs – totaled €565 million in the second quarter of the current fiscal year, compared with €605 million in the prior quarter.
Outlook for the third quarter of the 2023 fiscal year
Based on an assumed exchange rate of US$1.10 to the euro, Infineon expects to generate revenue of around €4 billion in the third quarter of the 2023 fiscal year. Revenue growth in the ATV segment is expected to increase slightly compared with the previous quarter. Revenue in the GIP segment should stay at about the level reached in the preceding quarter. In the PSS and CSS segment a revenue decline is forecast compared with the second quarter of the current fiscal year. Based on the revenue forecast for the group, the Segment Result Margin should be around 26 percent.
Outlook for the 2023 fiscal year
Notwithstanding the less favorable exchange rate now assumed of US$1.10 to the euro (previously US$1.05), the revenue forecast for the 2023 fiscal year has been revised up from €15.5 billion (plus or minus €500 million) to €16.2 billion (plus or minus €300 million). This is equivalent to a growth rate of 14 percent compared with the 2022 fiscal year. Revenue growth for both the ATV and GIP segments is expected to be above the average rate for the Group. In the CSS segment, revenue is likely to grow at around the average rate for the Group. Revenue in the PSS segment is expected to be lower than in the prior year. At the mid-point of the guided revenue range, the adjusted gross margin is now expected to be around 47 percent (previously around 45 percent) and the Segment Result Margin around 27 percent (previously around 25 percent).
