Infineon Technologies AG: INFINEON CONCLUDES A VERY PROFITABLE FIRST QUARTER AND RAISES ITS OUTLOOK FOR THE 2023 FISCAL YEAR SLIGHTLY, ADJUSTING FOR CURRENCY EFFECTS

• Q1 FY 2023: REVENUE €3.951 BILLION, SEGMENT RESULT €1.107 BILLION, SEGMENT RESULT MARGIN 28.0 PERCENT
• OUTLOOK FOR Q2 FY 2023: BASED ON AN ASSUMED EXCHANGE RATE OF US$1.05 TO THE EURO, REVENUE OF AROUND €3.9 BILLION WITH A SEGMENT RESULT MARGIN OF AROUND 25 PERCENT EXPECTED
• OUTLOOK FOR FY 2023: DESPITE A NOW ASSUMED EXCHANGE RATE OF US$1.05 TO THE EURO (PREVIOUSLY US$1.00), INFINEON CONTINUES TO ANTICIPATE REVENUES OF AROUND €15.5 BILLION (PLUS OR MINUS €500 MILLION), WITH AN ADJUSTED GROSS MARGIN OF AROUND 45 PERCENT AND A SEGMENT RESULT MARGIN OF NOW AROUND 25 PERCENT (PREVIOUSLY AROUND 24 PERCENT) AT THE MID-POINT OF THE GUIDED REVENUE RANGE. INVESTMENTS ARE STILL EXPECTED TO AMOUNT TO APPROXIMATELY €3.0 BILLION. TAKING THE PLANNED INVESTMENTS IN FRONTEND BUILDINGS INTO ACCOUNT, INFINEON CONTINUES TO EXPECT FREE CASH FLOW OF AROUND €0.8 BILLION AND ADJUSTED FREE CASH FLOW OF AROUND €1.5 BILLION

Neubiberg, 2 February 2023 – Today, Infineon Technologies AG is reporting results for the first quarter of its 2023 fiscal year (period ended 31 December 2022).
 

"Infineon is staying on course in choppy waters, and the first quarter of our 2023 fiscal year has been very profitable. Substantial parts of our business have proved robust even in a weaker macroeconomic environment," says Jochen Hanebeck, CEO of Infineon. "In particular, the energy transition and expansion of electromobility are causing a continuously high need for our solutions in industrial and automotive applications. In contrast, we are seeing significantly weaker demand in areas such as smartphones, PCs and data centers. We are continuing to navigate carefully in these challenging times and remain flexible in our approach to market dynamics. All in all, we are increasing our guidance slightly for the fiscal year, adjusting for currency effects."
 

¹ 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.

² The calculation for earnings per share and for adjusted earnings per share is based on unrounded figures.

GROUP PERFORMANCE IN THE FIRST QUARTER OF THE 2023 FISCAL YEAR

In the first quarter of the 2023 fiscal year, Group revenue was €3,951 million. Compared with revenue in the prior quarter of €4,143 million, this was a decline of 5 percent. Revenue fell in the Automotive (ATV), Industrial Power Control (IPC) and Power & Sensor Systems (PSS) segments, but grew in the Connected Secure Systems (CSS) segment. The somewhat weaker US dollar compared with the prior quarter had a slightly adverse impact on revenue.
 

The gross margin rose in the first quarter of the current fiscal year to 47.2 percent, from 44.4 percent in the preceding quarter. The adjusted gross margin also improved, from 46.3 percent in the fourth quarter of the 2022 fiscal year to 49.2 percent in the current quarter.
 

The Segment Result increased in the first quarter of the 2023 fiscal year to €1,107 million, from €1,058 million in the prior quarter. The Segment Result Margin improved from 25.5 percent in the fourth quarter of the 2022 fiscal year to 28.0 percent in the current quarter. Earnings performance in the first quarter is mainly related to positive pricing and mix effects.
 

The first-quarter non-segment result was a net loss of €141 million, compared with a net loss of €138 million in the prior quarter. The non-segment result for the first quarter of 2023 included €76 million relating to cost of goods sold, €53 million relating to selling, general and administrative expenses and €10 million relating to research and development expenses. Also included in the total for the first quarter were net other operating expenses of €2 million.
 

Operating profit improved in the first quarter of the 2023 fiscal year to €966 million, up from €920 million in the previous three-month period.
 

The financial result in the first quarter of the current fiscal year was a net loss of €24 million, compared with a net loss of €33 million in the fourth quarter of the 2022 fiscal year.
 

The tax expense in the first quarter of the 2023 fiscal year increased to €216 million, compared with €166 million in the prior quarter.
 

Profit from continuing operations in the first quarter of the 2023 fiscal year was €729 million, compared with €730 million in the preceding quarter. The result from discontinued operations in the first quarter was a loss of €1 million, compared with a profit of €5 million in the previous quarter. The profit for the period in the first quarter of the current fiscal year was €728 million, compared with €735 million in the prior quarter.
 

Earnings per share from continuing operations in the first quarter of the 2023 fiscal year was €0.55, compared with €0.56 in the preceding quarter (basic and diluted in each case). Adjusted earnings per share³ (diluted) increased in the first quarter of the current fiscal year to €0.64, from €0.63 in the fourth quarter of the 2022 fiscal year.
 

Investments – which Infineon defines as the sum of investments in property, plant and equipment, investments in other intangible assets and capitalized development costs – totaled €605 million in the first quarter of the current fiscal year, compared with €866 million in the prior quarter, corresponding to a typical seasonal pattern. Depreciation and amortization in the first quarter of the 2023 fiscal year amounted to €429 million, compared with €443 million in the fourth quarter of the 2022 fiscal year.
 

Free Cash Flow in the first quarter of the current fiscal year was €25 million, compared with €709 million in the preceding quarter. Main reasons for the decrease were the annual payout of variable remuneration components, the increase in inventories and the decrease in accounts payable. Cash flow from operating activities from continuing operations amounted to €631 million, compared with €1,580 million in the fourth quarter of the 2022 fiscal year.
 

The gross cash position at the end of the first quarter of the 2023 fiscal year was €3,708 million, compared with €3,717 million at 30 September 2022. Financial debt fell from €5,662 million at 30 September 2022 to €5,467 million at 31 December 2022 as a result of exchange rate movements. The net cash position improved, from net financial debt of €1,945 million at the end of the fourth quarter of the 2022 fiscal year to net financial debt of €1,759 million at the end of the first quarter of 2023.

OUTLOOK FOR THE SECOND QUARTER OF THE 2023 FISCAL YEAR

Based on an assumed exchange rate of US$1.05 to the euro, Infineon expects to generate revenue of around €3.9 billion in the second quarter of the 2023 fiscal year. Revenue growth in the ATV and IPC segments is forecast to be within a mid-single-digit percentage range compared with the first quarter. It is anticipated that revenue in the CSS segment will remain stable, whereas revenue in the PSS segment is expected to decline significantly due to weak market conditions for most of the target applications. Based on this revenue forecast, the Segment Result Margin should be around 25 percent.

OUTLOOK FOR THE FULL 2023 FISCAL YEAR

Notwithstanding a less favorable assumed exchange rate of now US$1.05 to the euro (previously US$1.00), Infineon continues to expect to generate revenues of €15.5 billion (plus or minus €500 million) for the 2023 fiscal year. This is equivalent to a growth rate of 9 percent compared with the 2022 fiscal year. Revenue growth for both the ATV and IPC segments is expected to be above the average rate for the Group. In the CSS segment, revenue is likely to grow at around the Group average rate. It is anticipated that the PSS segment will see a decline in revenue compared with the prior year. At the mid-point of the guided revenue range, the adjusted gross margin should be around 45 percent and the Segment Result Margin should come in at around 25 percent, after a previously anticipated level of around 24 percent.
 

Investments – which Infineon defines as the sum of investments in property, plant and equipment, investments in other intangible assets and capitalized development costs – are planned at around €3.0 billion for the 2023 fiscal year. The focus here will be on the construction of the third manufacturing module on the Kulim site (Malaysia) designed to produce compound semiconductors, the planned start of construction work on the fourth manufacturing module in Dresden (Germany) designed to produce analog/mixed-signal components and power semiconductors, and the continuing expansion of frontend manufacturing capacity especially in Dresden (Germany) and Villach (Austria).
 

Depreciation and amortization are predicted to be about €1.9 billion in the 2023 fiscal year, of which approximately €450 million is attributable to purchase price allocations arising mainly from the acquisition of Cypress. Taking the planned investment in frontend buildings into account, Free Cash Flow is forecast to be around €0.8 billion. Adjusted Free Cash Flow is expected to be around €1.5 billion, or about 10 percent of the forecast revenue for the year of €15.5 billion.
 

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 first quarter of the 2023 fiscal year can be found in the quarterly information at www.infineon.com.

All figures in this quarterly information are preliminary and unaudited.

ANALYST TELEPHONE CONFERENCE AND TELEPHONE PRESS CONFERENCE

The Management Board of Infineon will host a telephone conference call including a webcast for analysts and investors (in English only) on 2 February 2023 at 9:30 am (CET), 3:30 am (EST). During the call, the Infineon Management Board will present the Company’s results for the first quarter of the 2023 fiscal year as well as the outlook for the second quarter and the 2023 fiscal year. In addition, the Management Board will host a telephone press conference with the media at 11:00 am (CET), 5:00 am (EST). 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 Q1 Investor Presentation is available (in English only) at:

https://www.infineon.com/cms/en/about-infineon/investor/reports-and-presentations/

INFINEON FINANCIAL CALENDAR (* preliminary)

•   16 Feb 2023 Annual General Meeting
•   22 Feb 2023 Goldman Sachs European Technology Conference, London
•   27 Feb – 1 Mar 2023 Mobile World Congress, Barcelona
•   3 Mar 2023 Susquehanna Technology Conference, virtual
•   6 – 7 Mar 2023 Morgan Stanley, Technology, Media and Telecom Conference, San Francisco
•   9 – 10 Mar 2023 Oddo BHF TMT Forum, Paris
•   15 – 16 Mar 2023 Citi TMT Conference, London
•   30 Mar 2023 Stifel German Corporate Conference, Copenhagen
•   4 May 2023* Earnings Release for the Second Quarter of the 2023 Fiscal Year
•   3 Aug 2023* Earnings Release for the Third Quarter of the 2023 Fiscal Year
•  15 Nov 2023* Earnings Release for the Fourth Quarter and the 2023 Fiscal Year  

ABOUT INFINEON

Infineon Technologies AG is a global semiconductor leader in power systems and IoT. Infineon drives decarbonization and digitalization with its products and solutions. The company has around 56,200 employees worldwide and generated revenue of about €14,2 billion in the 2022 fiscal year (ending 30 September). Infineon is listed on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the OTCQX International over-the-counter market (ticker symbol: IFNNY). Further information is available at www.infineon.com

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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.

All figures mentioned in this press release are preliminary and unaudited.