Infineon Forecasts Earnings Will Advance on Automotive Demand

Infineon Technologies AG (IFX), Europe’s second-biggest chipmaker, forecast that earnings will improve in the current quarter as demand picks up in the car industry.

Operating profit will improve “slightly” in the fiscal second quarter ending March 31 from the 44 million euros ($60 million) in the previous three months, while sales will probably increase by a “mid-single-digit” percentage from 851 million euros. Analysts estimate second-quarter operating profit of 50 million euros and a sales increase of 1.9 percent to 867 million euros, according to averages compiled by Bloomberg.

Infineon, based in Neubiberg near Munich, said its business will be bolstered by sales of semiconductors used in cars after revenue fell short of analyst estimates in the three months ended Dec. 31. European peer STMicroelectronics NV (STM) today said it’s seeing “initial signs of a mild recovery” in the chip market after it also reported a drop in sales.

“Almost everybody is expecting an upturn toward the second half of the year, but the question is how strong it will be,” said Karsten Iltgen, an analyst at Bankhaus Lampe in Dusseldorf, Germany, who recommends investors sell their Infineon shares. “The results were along the lines predicted by the company.”

Photographer: Guenter Schiffmann/Bloomberg

An employee displays a box of Infineon Technologies AG semiconductor wafers for a photograph in a sterile room at the company's factory in Regensburg. Close

An employee displays a box of Infineon Technologies AG semiconductor wafers for a... Read More

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Photographer: Guenter Schiffmann/Bloomberg

An employee displays a box of Infineon Technologies AG semiconductor wafers for a photograph in a sterile room at the company's factory in Regensburg.

Infineon rose 1 percent to 6.46 euros at 9:03 a.m. in Frankfurt trading.

Infineon has postponed or canceled some development projects and curbed hiring to reduce costs amid slowing demand for semiconductors used in industrial machines and wind turbines. The measures are having an effect, which will continue to show in coming quarters, it said today.

Cash Declines

Still, the company, whose biggest customers include car- component maker Robert Bosch GmbH and Apple Inc. supplier Hon Hai Precision Industry Co., said its net cash position declined to 1.77 billion euros from 1.94 billion euros in the last quarter after it repurchased shares and profit slumped.

Global semiconductor revenue probably fell 3 percent to $298 billion last year amid uncertainty about the economy, researcher Gartner Inc. said in December.

Infineon reiterated that sales will drop by a “mid- to high- single-digit percentage” in the fiscal year ending Sept. 30. Operating profit will probably amount to a “mid- to high- single-digit percentage” of revenue, according to the forecast. Infineon assumes an exchange rate of $1.30 to the euro for the remainder of the fiscal year.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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