Electronics Production | July 27, 2007
Infineon results dragged down by Qimonda
The Infineon group reported revenues of Euro 1.75 billion, net loss of Euro 197 million, EBIT of negative Euro 280 million.
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. 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. 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. 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. 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. 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. 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 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. 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.