Infineon Is Growing Faster Than The Market
Infineon Technologies has reported results for Q4 and the 2016 fiscal year, both ended September 30, 2016. "Infineon has completed another successful fiscal year - with above-average revenue growth and a respectable improvement in earnings", stated Reinhard Ploss, CEO of Infineon. "We are strategically well positioned with our solutions for electro-mobility, autonomous driving, renewable energy generation and the efficient use of electric power. Infineon will again grow faster than the market in the current fiscal year."
Infineon is a market leader in power semiconductors and benefiting particularly from the growing need for solutions that help reduce CO2 emissions.
Ploss: "Due to growing demand for power semiconductors, we will have reached a level of capacity utilisation in our 300-millimeter manufacturing facilities by the end of 2017 that will allow us to begin to reap the benefits of our investment in this future-oriented technology. In light of improved productivity, efficiency benefits accruing from the integration of International Rectifier and a strong US dollar, we are raising our target for the Segment Result Margin to 17 percent over the economic cycle."
Infineon Group revenue grew from €1,632 million to €1,675 million quarter-on-quarter. Contributions to this 3 percent revenue growth were made by the Automotive (ATV) and Power Management & Multimarket (PMM) segments. Revenue recorded by the Industrial Power Control (IPC) and Chip Card & Security (CCS) segments was virtually unchanged. The gross margin in Q4 was 36.3 percent, compared with 36.6 percent in the preceding quarter.
The fourth-quarter figures include acquisition-related depreciation and amortization and other expenses attributable to the International Rectifier acquisition totaling €23 million. The adjusted gross margin came in at 37.7 percent, down from 38.1 percent one quarter earlier. Segment Result increased by 10 percent from €254 million to €280 million quarter-onquarter, as a result of which the Segment Result Margin improved from 15.6 percent to 16.7 percent.
The non-segment result for the three-month period was a net loss of €51 million, compared with a net loss of €61 million in the previous quarter. Of the fourth-quarter figure, €23 million related to the cost of goods sold, €2 million to research and development expenses and €22 million to selling, general and administrative expenses. Other operating income and other operating expenses amounted to a net expense of €4 million. The non-segment result includes €40 million of depreciation and amortisation charges arising in conjunction with the purchase price allocation and other expenses for postmerger integration measures relating to the acquisition of International Rectifier.
Operating income increased from €193 million in the third quarter of the 2016 fiscal year to €229 million in the fourth quarter. Income from continuing operations totaled €228 million, compared with €184 million in the previous three-month period. The loss from discontinued operations amounted to €3 million, compared with income of €2 million in the preceding quarter. Net income improved from €186 million to €225 million in Q4of the 2016 fiscal year. The figure for Q4 includes €15 million of tax income, compared with €3 million of tax income recorded in the third quarter.
Tax income primarily results from the reduction of deferred tax liabilities relating to the acquisition of International Rectifier and from the revaluation of deferred tax assets relating to German and foreign entities. Earnings per share improved quarter-on-quarter from €0.16 to €0.20 (basic and diluted). Adjusted earnings per share1 (diluted) improved from €0.19 to €0.21. For the purpose of calculating adjusted earnings per share (diluted), a number of items are eliminated, most notably acquisition-related depreciation/amortisation and other expenses (net of tax) as well as valuation allowances on deferred tax assets.
Outlook for first quarter of the 2017 fiscal year
In the first quarter of the 2017 fiscal year, Infineon expects a quarter-on-quarter revenue decrease of 4 percent (plus or minus 2 percentage points). This forecast is based on an assumed exchange rate of $1.10 to the euro. At the mid-point of the forecast revenue range, the Segment Result Margin is expected to be 14 percent.
Outlook for the 2017 fiscal year
Based on an assumed exchange rate of $1.10 to the euro, Infineon expects revenue growth in the 2017 fiscal year of around 6 percent (plus or minus 2 percentage points) and a Segment Result Margin of 16 percent at the mid-point of the forecast revenue range. The Automotive segment is expected to grow at a substantially faster rate than the Group average. Growth in the Industrial Power Control segment is forecast to be roughly in line with or slightly above the Group average. The Power Management & Multimarket and Chip Card & Security segments are both expected to report growth rates below the Group average.