DGAP-News: Infineon Technologies AG: FY 2019: FINAL QUARTER AND FULL YEAR EARNINGS IN LINE WITH EXPECTATIONS - OUTLOOK FOR FY 2020: MARKET RECOVERY NOT IN SIGHT BEFORE SECOND HALF OF FISCAL YEAR; INFINEON NEVERTHELESS SET TO CONTINUE TO GROW AND TO MAINTAIN STABLE MARGINS

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DGAP-News: Infineon Technologies AG / Key word(s): Quarter Results/Forecast
Infineon Technologies AG: FY 2019: FINAL QUARTER AND FULL YEAR EARNINGS IN LINE WITH EXPECTATIONS - OUTLOOK FOR FY 2020: MARKET RECOVERY NOT IN SIGHT BEFORE SECOND HALF OF FISCAL YEAR; INFINEON NEVERTHELESS SET TO CONTINUE TO GROW AND TO MAINTAIN STABLE MARGINS

12.11.2019 / 07:30
The issuer is solely responsible for the content of this announcement.


 

- Q4 FY 2019: REVENUE OF EUR2,062 MILLION; SEGMENT RESULT OF EUR311 MILLION; SEGMENT RESULT MARGIN OF 15.1 PERCENT

- FY 2019: REVENUE EUR8,029 MILLION, UP 6 PERCENT YEAR-ON-YEAR; SEGMENT RESULT EUR1,319 MILLION; SEGMENT RESULT MARGIN 16.4 PERCENT

- OUTLOOK FOR FY 2020: BASED ON AN ASSUMED EXCHANGE RATE OF US$1.13 TO THE EURO, YEAR-ON-YEAR REVENUE GROWTH OF 5 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) AND SEGMENT RESULT MARGIN OF AROUND 16 PERCENT AT MID-POINT OF REVENUE GUIDANCE EXPECTED. ABOUT 1.3 BILLION EUROS IN INVESTMENTS PLANNED. FREE CASH FLOW EXPECTED TO COME IN BETWEEN EUR500 AND EUR700 MILLION COMPARED WITH EUR39 MILLION IN THE FY 2019

- OUTLOOK FOR Q1 FY 2020: BASED ON AN ASSUMED EXCHANGE RATE OF US$1.13 TO THE EURO, QUARTER-ON-QUARTER REVENUE DECLINE OF 7 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) ANTICIPATED. AT THE MID-POINT OF REVENUE GUIDANCE, SEGMENT RESULT MARGIN EXPECTED AT AROUND 13 PERCENT

Neubiberg, Germany, 12 November 2019 - Infineon Technologies AG is today reporting results for the fourth quarter as well as for the full 2019 fiscal year, both ended 30 September 2019.

"We have achieved our targets for the fourth quarter, bringing a challenging fiscal year to an end on a good note. Demand was particularly strong for our power semiconductors for renewable energy applications and our sensors for consumer devices," said Dr. Reinhard Ploss, CEO of Infineon. "We are feeling the effects of weak global auto demand and do not expect any improvement for the time being. The general economic environment remains fraught with macroeconomic and political uncertainty. We do not expect markets to recover before the second half of the fiscal year."

Euro in millions Q4 FY19 Q3 FY19 +/- in %
       
Revenue 2,062 2,015 2
Segment Result 311 317 (2)
Segment Result Margin 15.1% 15.7%  
Income (loss) from continuing operations 163 224 (27)
Income (loss) from discontinued operations, net of income taxes (2) - ---
Net income 161 224 (28)
       
in Euro      
Basic earnings (loss) per share from continuing operations1 0.13 0.20 (35)
Basic earnings (loss) per share from discontinued operations1 - - -
Basic earnings per share1 0.13 0.20 (35)
       
Diluted earnings (loss) per share from continuing operations1 0.13 0.20 (35)
Diluted earnings (loss) per share from discontinued operations1 - - -
Diluted earnings per share1 0.13 0.20 (35)
       
Adjusted earnings per share diluted2 0.19 0.23 (17)
       
Gross margin 35.5% 36.5%  
Adjusted gross margin2 36.3% 37.2%  
 

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 FOURTH QUARTER OF THE 2019 FISCAL YEAR
In the fourth quarter of the 2019 fiscal year, revenue grew by 2 percent from EUR2,015 million to EUR2,062 million compared with the previous three-month period. The slightly stronger US dollar compared to the third quarter had a bit of a positive impact on revenue. The main reason for higher Group revenue, however, was the seasonal upturn in the Power Management & Multimarket (PMM) segment. Revenue was also slightly up in the Automotive (ATV) and Industrial Power Control (IPC) segments quarter-on-quarter, whereas the Digital Security Solutions (DSS) segment recorded a slight decrease.

The fourth-quarter gross margin came in at 35.5 percent, compared to 36.5 percent in the preceding three-month period. This includes acquisition-related depreciation and amortization as well as other expenses totaling EUR17 million, relating to the acquisition of International Rectifier. The adjusted gross margin declined from 37.2 percent to 36.3 percent quarter-on-quarter. The Segment Result for the final quarter of the 2019 fiscal year amounted to EUR311 million, compared to EUR317 million in the third quarter. The Segment Result Margin decreased from 15.7 percent to 15.1 percent by comparison.

The non-segment result for the three-month period ended in September was a net loss of EUR65 million, compared to a net loss of EUR34 million in the previous quarter. The fourth-quarter non-segment result included EUR17 million of cost of goods sold, EUR12 million of selling, general and administrative expenses and EUR1 million of research and development expenses. In addition, net operating expenses amounting to EUR35 million were incurred.

Operating income for the last quarter of the 2019 fiscal year amounted to EUR246 million, compared to the third-quarter figure of EUR283 million.

The financial result for the three-month period improved to a net expense of EUR18 million. The corresponding figure for the previous quarter had been a net expense of EUR31 million, which had included EUR22 million of costs incurred to hedge stock market-related risks in connection with the share capital increase for the planned acquisition of Cypress.

Income tax expense increased from EUR28 million to EUR64 million quarter-on-quarter.

Income from continuing operations for the fourth quarter decreased to EUR163 million, down from EUR224 million for the previous three-month period. Net income for the quarter amounted to EUR161 million, compared with EUR224 million one quarter earlier. Fourth-quarter income from discontinued operations came in at a loss of EUR2 million after the break-even result reported for the third quarter.

Earnings per share from continuing operations for the fourth quarter amounted to EUR0.13 (basic and diluted), compared to EUR0.20 in the previous quarter. Adjusted earnings per share3 (diluted) for the three-month period under report amounted to EUR0.19, compared to EUR0.23 one quarter earlier.

Investments - which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets, and capitalized development costs - amounted to EUR350 million in the fourth quarter and were thus slightly higher than the preceding quarter's figure of EUR344 million. Depreciation and amortization increased from EUR238 million to EUR244 million quarter-on-quarter.

Free cash flow from continuing operations improved significantly to EUR334 million in the fourth quarter of the 2019 fiscal year, up from EUR63 million in the previous three-month period. Net cash provided by operating activities from continuing operations in the fourth quarter amounted to EUR682 million, compared to EUR396 million in the preceding quarter.

The gross cash position at the end of the 2019 fiscal year amounted to EUR3,779 million, compared to EUR3,435 million at 30 June 2019. The net cash position improved from EUR1,900 million to EUR2,223 million during the three-month period under report. On 25 September 2019, Infineon placed a dual-tranche perpetual hybrid bond, raising EUR1.2 billion in connection with re-financing the planned acquisition of Cypress. The hybrid bond is recognized in equity with effect from 1 October 2019 - the date on which it was issued, and proceeds received - and is therefore not yet included in the cash position figures stated above.

In the third quarter of the 2019 fiscal year, deal-contingent EUR/USD contracts were concluded to hedge exchange rate risks relating to the purchase price obligation arising in connection with the planned acquisition of Cypress. In this context, cash flow hedges were accounted for. Their quarterly fair value adjustments increased equity by EUR98 million at the end of the fourth quarter of the 2019 fiscal year without income statement impact.

PROPOSED DIVIDEND FOR 2019 FISCAL YEAR: EUR0.27 PER SHARE
In recent years, Infineon has increased its dividend in several steps, from EUR0.10 per share for the 2010 fiscal year up to EUR0.27 per share for the 2018 fiscal year. At the upcoming Annual General Meeting on 20 February 2020, a proposal is to be made to shareholders to pay an unchanged dividend of EUR0.27 per share for the 2019 fiscal year, for which the new shares issued in June 2019 are fully entitled. Due to the approximately 10 percent increase in the number of shares, the dividend payment will thus rise from EUR305 million to EUR336 million. Infineon's dividend policy is to allow shareholders to participate adequately in earnings growth or, in times of flat or declining earnings, to at least pay a constant dividend.

OUTLOOK FOR THE 2020 FISCAL YEAR
Based on an assumed exchange rate of US$1.13 to the euro, Infineon expects revenue growth in the 2020 fiscal year of 5 percent (plus or minus 2 percentage points) and a Segment Result Margin of about 16 percent at the mid-point of the guided revenue range. The assumed EUR/USD exchange rate of 1.13 corresponds to the average actual exchange rate for the 2019 fiscal year. Revenue growth in the Automotive segment is expected to be slightly higher than the Group average. Power Management & Multimarket segment revenue growth is likely to be in line with the Group average. Growth in the Industrial Power Control segment is forecast to be marginally below the Group average, while Digital Security Solutions segment revenue is expected to remain flat or grow only slightly.

Investments in property, plant and equipment, intangible assets and capitalized development costs are planned at approximately EUR1.3 billion for the 2020 fiscal year. About one third of this amount will be spent for production buildings and related facilities, as well as office buildings, in order to be ready to fully participate in the next market upturn and benefit from structural growth potentials. The biggest single project remains the construction of the cleanroom for the new 300-millimeter facility in Villach. The timetable for completing this new cleanroom will be adapted to market developments and we expect start of production towards the end of the 2021 calendar year. Depreciation and amortization are expected to be in the region of EUR1 billion, whereby approximately EUR60 million of that amount relates to amortization resulting from purchase price allocations, primarily for International Rectifier. Free cash flow is expected to improve significantly compared to the previous fiscal year to between EUR500 and EUR700 million.

OUTLOOK FOR THE FIRST QUARTER OF THE 2020 FISCAL YEAR
Based on an assumed exchange rate of US$1.13 to the euro, Infineon expects revenue to decrease by 7 percent quarter-on-quarter (plus or minus 2 percentage points) in the first quarter of the 2020 fiscal year. In the Automotive and Digital Security Solutions segments, the extent of revenue contraction is predicted to be below the Group average. Revenue in the Industrial Power Control and Power Management & Multimarket segments is expected to decline at above the Group average. At the mid-point of revenue guidance, the Segment Result Margin is forecast to come in at about 13 percent. The figure will be positively impacted by a one-time effect related to inventory valuation. At the same time, idle costs are likely to rise noticeably compared to the September quarter.

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 fourth quarter and 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 CONFERENCE
Infineon will host a telephone conference call including a webcast for analysts and investors (in English only) on 12 November 2019 at 9:30 am (CET), 3:30 am (EST). During the call, the Infineon Management Board will present the Company's results for the fourth quarter and the outlook for the first quarter and the 2020 fiscal year. In addition, the Management Board will host a live press 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 Q4 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)

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

- 20 Nov 2019 DZ Bank Equity Conference, Frankfurt

- 25 Nov 2019 UBS German Senior Investor Day, Munich

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

- 20 Feb 2020 Annual General Meeting, Munich

- 24 - 26 Nov 2020 Investor Meetings at Mobile World Congress, Barcelona

- 5 May 2020* Earnings Release for the Second Quarter of the 2020
Fiscal Year

- 6 May 2020 Industrial Power Control Business Update at PCIM, Nuremberg

- 9 - 10 Jun 2020 Exane 22nd European CEO Conference, Paris

- 4 Aug 2020* Earnings Release for the Third Quarter of the 2020
Fiscal Year

- 9 Nov 2020* Earnings Release for the Fourth Quarter and 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 2019 fiscal year (ending 30 September), the Company reported sales of EUR8.0 billion with around 41.400 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


12.11.2019 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.
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Language: English
Company: Infineon Technologies AG
Am Campeon 1-15
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, TecDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange
EQS News ID: 910051

 
End of News DGAP News Service

910051  12.11.2019 

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