Infineon reports results for the third quarter of the 2007 fiscal year
For the full version of this news release (incl. financial data and business highlights), please download the PDF version available on the right
Analyst telephone conference
Press telephone conference
Neubiberg, Germany – July 27, 2007 – Infineon Technologies AG (FSE/NYSE:IFX) today reported results for the third quarter of the 2007 fiscal year. The Infineon group reported revenues of Euro 1.75 billion, net loss of Euro 197 million, EBIT of negative Euro 280 million, and basic and diluted loss per share of Euro 0.26.
Main highlights for Infineon excluding Qimonda
- Revenues for Infineon excluding Qimonda were Euro 1.01 billion, up three percent sequentially, mostly due to increased revenues in Communication Solutions.
- EBIT for Infineon excluding Qimonda was positive in the third quarter: Euro 13 million compared to negative Euro 28 million in the prior quarter. EBIT in the third quarter included charges of Euro 20 million for restructuring measures, largely offset by a gain of Euro 17 million related to the sale of the company’s Polymer Optical Fiber (POF) business. EBIT in the second quarter included net charges of Euro 29 million.
- Revenues of the Automotive, Industrial & Multimarket segment were Euro 752 million, reflecting another increase quarter on quarter. Segment EBIT increased to Euro 81 million from Euro 66 million in the prior quarter. Included was a gain related to the sale of the company’s POF business.
- The Communication Solutions segment increased mobile phone platform shipments significantly, driving revenues up nine percent sequentially to Euro 259 million. Segment EBIT improved to negative Euro 34 million from negative Euro 53 million in the prior quarter.
Outlook for Infineon excluding Qimonda for the fourth quarter
For the fourth quarter of the 2007 fiscal year, Infineon expects revenues for its segments excluding Qimonda to increase further, driven mainly by the Communication Solutions segment and to a lesser extent by the Automotive, Industrial & Multimarket segment. The company expects further strong growth in EBIT with improving EBIT margin. Net charges are expected to be insignificant in the fourth quarter. Additional details concerning the outlook can be found in the segments’ sections below. “With positive EBIT and an improved EBIT margin in the third quarter, Infineon excluding Qimonda made further progress towards sustainable profitability. The recently announced acquisition in the area of DSL Customer Premises Equipment marks the first selective strengthening of our core businesses since the carve-out of Qimonda”, said Dr. Wolfgang Ziebart, President and CEO of Infineon Technologies AG. “Going forward, we aim for further improvements in our EBIT margin and we will continue to strengthen our core businesses.“
Revenues of the Infineon group in the third quarter of the 2007 fiscal year were Euro 1.75 billion, down 11 percent compared to the second quarter. Revenues of Infineon excluding Qimonda increased to Euro 1.01 billion from Euro 978 million in the prior quarter.
Net Loss, Basic and Diluted Loss per Share
The Infineon group net loss was Euro 197 million in the third quarter, resulting in basic and diluted loss per share of Euro 0.26, compared with a net loss of Euro 11 million and basic and diluted loss per share of Euro 0.01 in the second quarter.
Earnings Before Interest and Taxes (EBIT)
The Infineon group reported EBIT of negative Euro 280 million in the third quarter, down from Euro 49 million in the prior quarter. Infineon excluding Qimonda reported EBIT of Euro 13 million in the third quarter, up from negative Euro 28 million in the second quarter. EBIT in the third quarter included charges of Euro 20 million, for restructuring measures in manufacturing facilities and further streamlining of the company’s research & development locations, largely offset by a gain of Euro 17 million related to the sale of the company’s POF business. In the prior quarter, EBIT included charges of Euro 54 million, mainly for restructuring and an asset write-down, partially offset by gains totaling Euro 25 million related to asset disposals and a revision to accrued personnel cost.
Segments’ third quarter performance and outlook
Automotive, Industrial & Multimarket (AIM)
In the third quarter of the 2007 fiscal year, the Automotive, Industrial & Multimarket segment reported revenues of Euro 752 million, representing a two percent increase over the prior quarter. EBIT increased to Euro 81 million from Euro 66 million in the prior quarter. Third quarter EBIT included a gain of Euro 17 million related to the sale of the company’s POF business.
As anticipated, revenues and EBIT in the automotive business increased, mostly due to seasonality. The industrial & multimarket business remained broadly flat compared with the second quarter as continued demand in high-power products offset some softness in the low-power business. Results of Infineon’s security & ASIC business were in line with the prior quarter, as strength in the chip card and security business was offset by continued softness in the hard-disk-drive business.
Automotive, Industrial & Multimarket’s outlook for fourth quarter of the 2007 fiscal year
In the fourth quarter of the 2007 fiscal year, Infineon expects the revenues of its Automotive, Industrial & Multimarket segment to increase compared to the third quarter. The company expects improved EBIT performance in the segment’s ongoing operations, excluding the effect of the gain in the third quarter from the sale of the POF business. The EBIT margin is expected to be close to ten percent. Results in the segment’s automotive business are expected to remain broadly on the same level as in the third quarter. The industrial & multimarket business is expected to post higher revenues and EBIT, mainly due to improved demand in the consumer and computer markets. The security & ASIC business is expected to be negatively impacted by continued weak demand for hard-disk-drives, despite further good business development in the chip card and security business.
Communication Solutions (COM)
In the third quarter of the 2007 fiscal year, revenues in the Communication Solutions segment were Euro 259 million, a nine percent increase compared to the prior quarter. EBIT improved in line with the revenue increase to negative Euro 34 million, compared to negative Euro 53 in the second quarter.
In the wireless business, mobile phone platform shipments increased strongly, as expected, driven both by continued ramp-ups to existing customers and the start of ramp-ups at new customers. Revenues in the broadband business decreased compared to the prior quarter, mainly due to a temporary slowdown in some infrastructure deployments, as well as customer-related inventory issues in broadband CPE following strong demand in previous quarters.
Communication Solutions’ outlook for the fourth quarter of the 2007 fiscal year
In the fourth quarter of the 2007 fiscal year, Infineon expects revenues of the Communication Solutions segment to increase strongly compared to the third quarter, mainly driven by continued increases in mobile phone platform shipments due to scheduled production ramp-ups. In the broadband access business, revenues are anticipated to remain stable. The Communication Solutions segment’s EBIT is also anticipated to improve considerably, driven by the revenue increase. The company continues to target break-even EBIT for its wireless business for the fourth quarter of the 2007 calendar year.
In the third quarter of the 2007 fiscal year, Qimonda reported revenues of Euro 740 million, a decline of 25 percent from Euro 984 million quarter over quarter. EBIT was negative Euro 293 million compared to Euro 77 million in the prior quarter. Minority interests, calculated from Qimonda’s third quarter net loss, were negative Euro 31 million. Infineon's ownership in Qimonda as of June 30, 2007 was 85.9 percent.
Qimonda’s outlook for the fourth quarter of the 2007 fiscal year
Qimonda expects its bit production to grow by 15 to 20 percent in the fourth quarter of the 2007 fiscal year, mainly based on increased in-house and partner capacities and continued productivity improvements from the ongoing conversion to 80 nanometer and 75 nanometer technologies. Qimonda targets a share of bit-shipments to non-PC applications of around 50 percent for the fourth quarter, and expects the trend of strong demand for PC-related products in particular to continue.
Other Operating Segments / Corporate and Eliminations
Third quarter EBIT in Corporate and Eliminations included charges of Euro 20 million for restructuring measures in manufacturing facilities and further streamlining of the company’s research & development locations. EBIT of Corporate and Eliminations in the second quarter included charges of Euro 54 million.
These primarily consisted of restructuring charges of approximately Euro 20 million for planned downsizings, mainly in the Essonnes, France (ALTIS) manufacturing facility and in the company’s baseband business after the insolvency of BenQ, as well as an asset write-down of Euro 35 million. Also included in EBIT for the second quarter was a positive effect of Euro 22 million from a revision to accrued personnel costs.
Other Operating Segments / Corporate and Eliminations’ outlook for the fourth quarter of the 2007 fiscal year
In the fourth quarter, Infineon expects revenues and EBIT in Other Operating Segments and Corporate and Eliminations to remain broadly unchanged prior to inclusion of net charges. Net charges are expected to be insignificant in the fourth quarter.
Group Tax Position
With the Corporate Tax Reform Act 2008 likely to be enacted in Germany in the fourth quarter of the 2007 fiscal year, Infineon will have to revalue the deferred tax positions on its balance sheet relating to its German operations. The resulting devaluation of deferred tax assets would lead to an income tax charge in the fourth quarter.
Additional major business highlights of Infineon’s segments in the third quarter of the 2007 fiscal year can be found in this document after the financial tables.
All figures are preliminary and unaudited.
Analyst and press telephone conferences
Infineon Technologies AG will conduct a telephone conference (in English only) with analysts and investors on July 27, 2007, at 10:00 a.m. Central European Summer Time (CEST), 4:00 a.m. Eastern Daylight Time (U.S. EDT), to discuss operating performance during the third quarter of the 2007 fiscal year. In addition, the Infineon Management Board will host a telephone conference with the media at 11:30 a.m. (CEST), 5:30 a.m. (U.S. EDT). It can be followed in German and English over the Internet. Both conference calls will be available live and for download on the Infineon web site at www.infineon.com.
IFX financial and trade fair calendar (*preliminary date)
Nov 14, 2007* Earnings Release for the Fourth Quarter and Full 2007 Fiscal Year
Jan 28, 2008* Earnings Release for the First Quarter of the 2008 Fiscal Year
Feb 12, 2008 Analyst Presentation at the Mobile World Congress in Barcelona
Feb 14, 2008* Annual General Meeting of Shareholders
Apr 23, 2008* Earnings Release for the Second Quarter of the 2008 Fiscal Year
Jul 25, 2008* Earnings Release for the Third Quarter of the 2008 Fiscal Year
Dec 03, 2008* Earnings Release for the Fourth Quarter and Full 2008 Fiscal Year
This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments in the world semiconductor market, including the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the continuing transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets, and the continued development of the business of Qimonda as a stand-alone entity and any future corporate financing measures Infineon or Qimonda may undertake. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein and those described in the “Risk Factors” section of the annual report of Infineon on Form 20-F filed with the U.S. Securities and Exchange Commission on November 30, 2006. As a result, our actual results could differ materially from those contained in the forward-looking statements. Infineon does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.