Infineon Q1 Profit Up; Sees Flat Q2 Revenues Q-O-Q, FY Revenue At Lowend Of View

Infineon Technologies AG (IFNNY), a German manufacturer of semiconductors and system solutions, reported Tuesday higher profit in its first quarter driven by good revenue growth. Looking ahead, the company said it expects second-quarter revenue to remain stable sequentially, and that fiscal 2019 revenue growth will be at the lower end of forecast range amid slowing global economic momentum. The shares were losing around 1.1 percent in the morning trading in Germany.

Reinhard Ploss, CEO of Infineon, said, “So far we have been able to master the challenges of an increasingly difficult business environment well. …Our long-term growth prospects remain intact. We will therefore continue to pursue core projects such as the construction of the 300-millimeter cleanroom in Villach, but moderately reduce investments in manufacturing equipment.”

For the first quarter, net income climbed 24 percent to 254 million euros from last year’s 205 million euros. Earnings per share were 0.22 euro, up 22 percent from 0.18 euro last year. Adjusted earnings per share were 0.24 euro, compared to prior year’s 0.20 euro.

Segment Result of 359 million euros climbed 27 percent from last year’s 283 million euros. Segment Result margin was 18.2 percent, up from 15.9 percent a year ago.

Revenue grew 11 percent to 1.97 billion euros from 1.78 billion euros a year ago.

On a sequential basis, net income climbed 80 percent, while revenues dropped 4 percent from the preceding third quarter. Revenue was down slightly in the Automotive and Industrial Power Control segments.

Looking ahead, for the second quarter, Infineon expects revenue to be stable quarter-on-quarter, plus or minus 2 percentage points. At the mid-point of revenue guidance, the segment result margin is expected to come in at about 16 percent.

Further, for fiscal year 2019, Infineon now expects to reach the lower end of its predicted revenue range for the 2019 fiscal year, which corresponds to year-on-year revenue growth of 9 percent. At this revenue level, the segment result margin should come in at about 17.5 percent.

Revenue growth in the Automotive segment is predicted to exceed the Group average. The Industrial Power Control segment is forecast to grow in line with the Group average. Revenue growth in the Power Management & Multimarket segment is expected to be below the Group average.

Due to the difficult market situation, revenue in the Digital Security Solutions segment is forecast to drop by a low- to mid-single digit percentage year-on-year.

The company noted that planned investments will be reduced by between 100 million euros and 200 million euros, in light of slower rate of growth, to approximately 1.5 billion euros for the 2019 fiscal year. The previous forecast range was 1.6 billion euros to 1.7 billion euros.

In Germany, Infineon shares were trading at 19.18 euros, down 1.11 percent.

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