Infinion brings production start in Villach forward

“Infineon has made a good start to the new fiscal year. Despite headwinds from a weak US dollar, we recorded significant increases in both revenue and earnings in the first quarter. In addition to the economic recovery in some regions, we continue to benefit from the digitalization push affecting all areas of life. Semiconductors are needed more than ever,” said Dr. Reinhard Ploss, CEO of Infineon. "We are monitoring ongoing risks closely. Nevertheless, in view of dynamic ordering momentum and manufacturing plants running at good utilization rates in the majority of product areas, we are making a slight upward adjustment to our outlook for the full year. We are increasing our investments in manufacturing capacity and bringing forward the starting date for the new power semiconductor plant in Villach to the last quarter of the current fiscal year." Group performance in first quarter of 2021 fiscal year Revenue for the three-month period increased from EUR 2,490 million to EUR 2,631 million quarter-on-quarter, with all segments contributing to the 6 percent growth despite the weaker US dollar. Revenue grew particularly strongly in the Automotive (ATV) segment. The Industrial Power Control (IPC) and Power & Sensor Systems (PSS) segments also recorded marked increases, while the Connected Secure Systems (CSS) saw a slight improvement compared to the previous quarter. Infineon’s gross margin rose from 31.8 percent in the previous three-month period to 37.4 percent in the first quarter of the current fiscal year. The adjusted gross margin improved from 36.6 percent to 40.3 percent quarter-on-quarter. The Segment Result rose considerably from EUR 379 million to EUR 489 million, pushing up the Segment Result Margin for the quarter from 15.2 percent to 18.6 percent. In addition to a sharp decrease in underutilization costs, non-recurring items – such as research subsidies received and patent-related revenue – also contributed to the improvement. Operating income rose from EUR 182 million to EUR 332 million quarter-on-quarter. The financial result improved from negative EUR 28 million to negative EUR 26 million Investments – which Infineon defines as the sum of purchases of property, plant and equipment, purchases of other intangible assets and capitalized development costs – totaled EUR 283 in the first quarter of the current fiscal year, compared with EUR 332 million in the preceding three-month period. Depreciation and amortization decreased from EUR 379 million to EUR 368 million quarter-on-quarter. Free cash flow generated totaled EUR 313 million, down from EUR 387 million one quarter earlier. Net cash provided by operating activities from continuing operations amounted to EUR 588 million, compared to EUR 747 million in the final quarter of the preceding fiscal year Outlook for the second quarter of the 2021 fiscal year Based on an assumed exchange rate of US$1.20 to the euro, Infineon expects to generate revenue of between EUR 2.5 billion and EUR 2.8 billion in the second quarter of the 2021 fiscal year. Revenue generated by the ATV and PSS segments is predicted to grow by a low-single digit percentage compared to the previous quarter. Revenue in IPC is expected to remain at a similar level to the previous quarter while revenue of the CSS segment should see a low-single digit percentage decline quarter-on-quarter. At the mid-point of the guided revenue range, the Segment Result Margin is expected to come in at about 16.5 percent. Outlook for the 2021 fiscal year Based on an assumed exchange rate of USD 1.20 to the euro, Infineon expects to generate revenue of around EUR 10.8 billion (plus or minus 5 percent) in the 2021 fiscal year. Particularly for the ATV and PSS segments, revenue is expected to grow during the second half of the fiscal year, driven by continued market momentum. At the mid-point of the guided revenue range the Segment Result Margin is expected to come in at about 17.5 percent. Investments in property, plant and equipment and other intangible assets, including capitalized development costs, are planned to be around EUR 1.6 billion for the 2021 fiscal year. Depreciation and amortization are expected to amount to between EUR 1.5 billion and EUR 1.6 billion, of which approximately EUR 500 million is attributable to depreciation and amortization from purchase price allocations arising mainly in connection with the acquisition of Cypress and to a lesser extent with the acquisition of International Rectifier. Free cash flow is predicted to exceed EUR800 million.