DGAP-News: Infineon Technologies AG / Key word(s): Quarterly / Interim Statement/Forecast Infineon Technologies AG: INFINEON REMAINS FIRMLY ON COURSE: REVENUE AND SEGMENT RESULT MARGIN FOR THIRD QUARTER AT UPPER END OF FORECAST RANGE 01.08.2018 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- - Q3 FY 2018: REVENUE EUR 1,941 MILLION; SEGMENT RESULT EUR 356 MILLION; SEGMENT RESULT MARGIN 18.3 PERCENT; EARNINGS PER SHARE EUR 0.24 (BASIC AND DILUTED); ADJUSTED EARNINGS PER SHARE EUR 0.24 (DILUTED); GROSS MARGIN 38.2 PERCENT; ADJUSTED GROSS MARGIN 39.2 PERCENT - OUTLOOK FOR Q4 FY 2018: BASED ON AN ASSUMED EXCHANGE RATE OF US$ 1.20 TO THE EURO, QUARTER-ON-QUARTER REVENUE GROWTH OF 3 PERCENT (PLUS OR MINUS 2 PERCENTAGE POINTS) AND SEGMENT RESULT MARGIN OF 19 PERCENT AT MID-POINT OF REVENUE GUIDANCE. FOR THE 2018 FISCAL YEAR AS A WHOLE, THIS WOULD TRANSLATE ARITHMETICALLY INTO YEAR-ON-YEAR REVENUE GROWTH OF 6.4 TO 7.4 PERCENT AND A SEGMENT RESULT MARGIN OF 17.5 PERCENT AT THE MID-POINT OF REVENUE GUIDANCE FOR FY 2018 Neubiberg, Germany - 1 August 2018 - Infineon Technologies AG today is reporting results for the third quarter of its 2018 fiscal year (period ended 30 June 2018). "Infineon continues to be on course for success. The dollar has regained some strength and is providing us with additional tailwind," stated Dr. Reinhard Ploss, CEO of Infineon. "The automotive business does well. Electro-mobility in particular is currently driving growth. Demand is also strong for drives used in industrial machines as well as for our solutions for home and DIY appliances, which are increasingly battery-powered. We expect demand for our products as well as for increasingly high-value integrated solutions to keep growing. As a reliable partner to our customers, we are preparing for this by investing in particular in a new 300-millimeter thin-wafer manufacturing facility for power semiconductors at the Villach site." Euro in millions Q3 Q2 +/- in FY18 FY18 % Revenue 1,941 1,836 6 Segment Result 356 314 13 Segment Result Margin 18.3% 17.1% Income (loss) from continuing operations 254 457 (44) Income (loss) from discontinued operations, net of 17 - +++ income taxes Net income 271 457 (41) in Euro Basic earnings (loss) per share from continuing 0.22 0.40 (45) operations1 Basic earnings (loss) per share from discontinued 0.02 - +++ operations1 Basic earnings per share1 0.24 0.40 (40) Diluted earnings (loss) per share from continuing 0.22 0.40 (45) operations1 Diluted earnings (loss) per share from 0.02 - +++ discontinued operations1 Diluted earnings per share1 0.24 0.40 (40) Adjusted earnings per share diluted2 0.24 0.26 (8) Gross margin 38.2% 37.1% Adjusted gross margin2 39.2% 38.0% 1 The calculation for earnings per share and for adjusted earnings per share is based on unrounded figures. 2 The reconciliation of net income to adjusted net income and adjusted earnings per share as well as of cost of goods sold to adjusted cost of goods sold and adjusted gross margin can be found in the quarterly information at www.infineon.com. GROUP PERFORMANCE IN THIRD QUARTER OF 2018 FISCAL YEAR In the third quarter of the 2018 fiscal year, revenue grew by 6 percent from EUR 1,836 million to EUR 1,941 million quarter-on-quarter. Rising demand and a stronger US dollar caused revenue to grow in all four segments, i.e. Automotive (ATV), Industrial Power Control (IPC), Power Management & Multimarket (PMM) and Chip Card & Security (CCS). The gross margin in the third quarter improved to 38.2 percent, compared to 37.1 percent in the second quarter. These figures include acquisition-related depreciation and amortization and other expenses totaling EUR 18 million, mainly relating to the acquisition of International Rectifier. The adjusted gross margin amounted to 39.2 percent, up from the 38.0 percent recorded for the previous quarter. The Segment Result rose from EUR 314 million to EUR 356 million quarter-on-quarter. The third-quarter Segment Result Margin climbed to 18.3 percent from 17.1 percent in the second quarter. The non-segment result for the three-month period under report was a net loss of EUR 37 million, compared with the previous quarter's net profit of EUR 218 million. The net profit reported for the second quarter included a pre-tax gain of EUR 268 million arising on the sale of the major part of Infineon's RF power business to Cree Inc., USA, which, along with related impairment losses of EUR 11 million, were included in other operating income. The third-quarter non-segment result comprises EUR 18 million of cost of goods sold, EUR 17 million of selling, general and administrative expenses and EUR 2 million of research and development expenses. The non-segment result includes EUR 32 million of depreciation and amortization arising in conjunction with the purchase price allocation as well as other expenses for post-merger integration measures relating to International Rectifier. Third-quarter operating income amounted to EUR 319 million, compared to the preceding quarter's EUR 532 million, which had included the above-mentioned gain on the sale of the major part of the RF power business. Income from continuing operations for the third quarter decreased accordingly to EUR 254 million, down from the EUR 457 million reported for the second quarter. Income from discontinued operations improved quarter-on-quarter from a break-even amount of EUR 0 million to EUR 17 million in the third quarter. Net income for the three-month period totaled EUR 271 million, compared with EUR 457 million in the previous quarter. The third-quarter income tax expense amounted to EUR 49 million. The corresponding figure for the second quarter was EUR 62 million, influenced in part by the gain arising on the sale of the major part of the RF power business. Earnings per share (basic and diluted) for the third quarter of the 2018 fiscal year amounted to EUR 0.24, down from the previous quarter's EUR 0.40, which had been impacted by the above-mentioned exceptional item. Adjusted earnings per share3 (diluted) amounted to EUR 0.24, compared to EUR 0.26 in the second quarter. For the purpose of calculating adjusted earnings per share (diluted), a number of items were eliminated, most notably acquisition-related depreciation/amortization and other expenses (net of tax) as well as reversals of valuation allowances on deferred tax assets. Investments - which Infineon defines as the sum of purchases of property, plant and equipment, purchases of intangible assets and capitalized development costs - amounted to EUR 280 million in the third quarter of the 2018 fiscal year, compared with EUR 263 million in the preceding three-month period. Depreciation and amortization increased from EUR 211 million to EUR 219 million quarter-on-quarter. Free cash flow from continuing operations amounted to EUR 192 million. In the second quarter of the 2018 fiscal year, free cash flow totaled EUR 334 million, including in particular the impact of the sale of the major part of the RF power business. Net cash provided by operating activities from continuing operations increased from EUR 310 million to EUR 462 million quarter-on-quarter. The gross cash position rose from EUR 2,438 million to EUR2,621 million over the course of the third quarter. The net cash position improved from EUR 649 million to EUR 792 million during the same period. Provisions relating to Qimonda decreased from EUR 30 million at 31 March 2018 to EUR 28 million at 30 June 2018. These provisions had been recognized for legal costs in conjunction with the defense against claims made by the Qimonda insolvency administrator and for residual liabilities relating to Qimonda Dresden GmbH & Co. OHG. OUTLOOK FOR FOURTH QUARTER OF 2018 FISCAL YEAR Based on an assumed exchange rate of US$ 1.20 to the euro, Infineon forecasts fourth-quarter revenue growth of 3 percent (plus or minus 2 percentage points). At the mid-point of the revenue guidance, the Segment Result Margin is expected to come in at about 19 percent. For the 2018 fiscal year as a whole, Infineon therefore expects year-on-year revenues growth of 6.4 to 7.4 percent, which is at the upper end of the 4 to 7 percent range previously forecast. The average EUR/USD exchange rate during the 2017 fiscal year was 1.11 and thus significantly more favorable for Infineon's revenue and earnings performance than the exchange rate of 1.20, which is now projected to be the average for the 2018 fiscal year. At an unchanged exchange rate of 1.11, expected year-on-year growth would be correspondingly higher and within the double-digit percentage range. The Segment Result Margin is predicted to be in the region of 17.5 percent at the mid-point of revenue guidance. Previously, a segment profit margin of 17 percent had been expected at the mid-point of revenue guidance. The ATV and IPC segments are expected to record faster revenue growth than the average for the Group as a whole. Revenue growth in the PMM segment is expected to be slightly below the Group average, but still sufficient to more than offset the decrease in revenue caused by the sale of the major part of Infineon's RF power business. Given the difficult market situation, the CCS segment will not be able to offset the US dollar's sharp loss in value over the course of the year. Revenue is therefore expected to decline. Investments in property, plant and equipment, intangible assets and capitalized development costs in the region of EUR 1.2 billion are planned for the 2018 fiscal year. The ratio for investments as a percentage of sales (at the mid-point of the planned revenue range for the 2018 fiscal year) is forecast to come in at about 16 percent. This development reflects sizeable investments in additional manufacturing capacities, especially for electro-mobility products. Depreciation and amortization is expected to be in the region of EUR 850 million. 3 Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior performance indicator, but rather as additional information to the net income and earnings per share (diluted) determined in accordance with IFRS. Infineon's segments' performance in the third quarter of the 2018 fiscal year can be found in the quarterly information at www.infineon.com. All figures in this quarterly information are preliminary and unaudited. ANALYST AND PRESS TELEPHONE CONFERENCE Infineon will host a conference call for analysts and investors (in English only) on 1 August 2018 at 9:30 am (CEST), 3:30 am (EDT). During the call, the Infineon Management Board will present the Company's results for the third quarter of the 2018 fiscal year and discuss the outlook for the fourth quarter. In addition, the Management Board will host a telephone conference with the media at 11:00 am (CEST), 5:00 am (EDT). It can be followed over the Internet in both English and German. Both conferences will also be available live and for download on Infineon's website at www.infineon.com/investor. The Q3 Investor Presentation is available (in English only) at: http://www.infineon.com/cms/en/corporate/investor/reporting/ INFINEON FINANCIAL CALENDAR (* preliminary) - 30 Aug 2018 Commerzbank Sector Conference, Frankfurt - 24 Sept 2018 Berenberg and Goldman Sachs 7th German Corporate Conference, Unterschleißheim nearby Munich - 25 Sept 2018 Baader Investment Conference, Munich - 2 Oct 2018 ATV Presentation by Peter Schiefer, Division President, London - 12 Nov 2018* Earnings Release for the Fourth Quarter and the 2018 Fiscal Year - 14 - 15 Nov 2018 Morgan Stanley TMT Conference, Barcelona - 27 - 28 Nov 2018 Credit Suisse TMT Conference, Scottsdale, Arizona - 28 Nov 2018 Equita European Conference, Milan - 28 Nov 2018 UBS German Senior Investor Day, Munich ABOUT INFINEON Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener. Microelectronics from Infineon is the key to a better future. In the 2017 fiscal year (ending 30 September), the Company reported sales of around EUR7.1 billion with about 37,500 employees worldwide. Infineon is listed on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX International Premier (ticker symbol: IFNNY). Further information is available at www.infineon.com This press release is available online at www.infineon.com/press Follow us: Twitter - Facebook - LinkedIn D I S C L A I M E R This press release contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group. These statements are based on assumptions and projections resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may therefore differ materially from what has been expected. Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements. Due to rounding, numbers presented throughout this press release and other reports may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Contact: Bernd Hops, Media Relations, phone: +49 89 234-24123 [IMAGE], fax: +49 89 234-154123 [IMAGE] --------------------------------------------------------------------------- 01.08.2018 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: Infineon Technologies AG Am Campeon 1-15 85579 Neubiberg Germany Phone: +49 (0)89 234-26655 Fax: +49 (0)89 234-955 2987 E-mail: [email protected] Internet: www.infineon.com ISIN: DE0006231004 WKN: 623100 Indices: DAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 709533 01.08.2018