Infineon Technologies AG: Strong performance by Infineon in the June quarter. Outlook for the 2023 fiscal year confirmed

• Q3 FY 2023: REVENUE €4.089 BILLION, SEGMENT RESULT €1.067 BILLION, SEGMENT RESULT MARGIN 26.1 PERCENT
• OUTLOOK FOR Q4 FY 2023: BASED ON AN ASSUMED EXCHANGE RATE OF US$1.10 TO THE EURO, REVENUE OF AROUND €4 BILLION WITH A SEGMENT RESULT MARGIN OF AROUND 25 PERCENT EXPECTED
• OUTLOOK FOR FY 2023: BASED ON AN ASSUMED EXCHANGE RATE OF US$1.10 TO THE EURO, INFINEON CONTINUES TO ANTICIPATE REVENUE TO BE AT AROUND €16.2 BILLION WITH AN ADJUSTED GROSS MARGIN OF ABOUT 47 PERCENT AND A SEGMENT RESULT MARGIN OF ABOUT 27 PERCENT. INVESTMENTS ARE EXPECTED TO AMOUNT TO APPROXIMATELY €3.0 BILLION. TAKING THE PLANNED INVESTMENTS IN FRONTEND BUILDINGS INTO ACCOUNT, FREE CASH FLOW IS NOW EXPECTED TO BE AROUND €1.2 BILLION (PREVIOUSLY €1.1 BILLION) AND ADJUSTED FREE CASH FLOW NOW AROUND €1.7 BILLION (PREVIOUSLY €1.8 BILLION)

Neubiberg, 3 August 2023 – Today, Infineon Technologies AG is reporting results for the third quarter of its 2023 fiscal year (period ended 30 June 2023).

We have strongly performed in the past quarter, while Semiconductor market trends continue to present a mixed picture with both light and shade," says Jochen Hanebeck, CEO of Infineon. "On the one hand, in electromobility, renewable energy and related application areas, demand has stayed high. On the other hand, demand for consumer applications, such as PCs and smartphones remains low. Infineon is performing well in this challenging market environment thanks to its persistent focus on structural growth drivers for the digital transformation and the transition to a green economy. This is why we take a forward-looking long-term approach and are investing in additional manufacturing capacity."

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 THIRD QUARTER OF THE 2023 FISCAL YEAR

In the third quarter of the 2023 fiscal year, Group revenue was €4,089 million. Compared with revenue in the prior quarter of €4,119 million, this was a decrease of 1 percent corresponding to the slight decline in the US dollar in comparison with the second quarter. Revenue in the Automotive (ATV) and Green Industrial Power (GIP) segments increased slightly. In the Power & Sensor Systems (PSS) segment, revenue decreased slightly, while revenue in the Connected Secure Systems (CSS) segment declined somewhat faster.

The gross margin in the third quarter of the current fiscal year was 44.5 percent, compared with 46.6 percent in the prior quarter. The adjusted gross margin was 46.2 percent, compared with 48.6 percent in the prior quarter.

The Segment Result in the third quarter of the 2023 fiscal year was €1,067 million, compared with €1,180 million in the prior quarter. The Segment Result Margin was 26.1 percent, compared with 28.6 percent in the second quarter of the current fiscal year.

The third-quarter Non Segment Result was a net loss of €71 million, compared with a net loss of €107 million in the prior quarter. The non-segment result for the third quarter of the 2023 fiscal year includes €67 million relating to cost of goods sold, €55 million relating to selling, general and administrative expenses and €12 million relating to research and development expenses. The non-segment result for the third quarter also contains a net figure for other operating income of €63 million, which includes a gain from the sale of the Temecula site in the USA.

Operating profit in the third quarter of the 2023 fiscal year was €996 million, compared with €1,073 million in the prior quarter.

The financial result in the third quarter of the current fiscal year was a net loss of €5 million, compared with a net loss of €17 million in the second quarter of the 2023 fiscal year.

The tax expense in the third quarter of the 2023 fiscal year was €167 million, down from the figure for the prior quarter of €237 million.

Profit from continuing operations improved slightly in the third quarter of the 2023 fiscal year to €835 million from €827 million in the prior quarter. The result from discontinued operations was a loss of €4 million, compared with a loss of €1 million in the prior quarter. The profit for the period improved slightly in the third quarter of the 2023 fiscal year to €831 million, up from €826 million in the prior quarter.

Earnings per share from continuing operations in the third quarter of the 2023 fiscal year remained unchanged compared with the prior quarter at €0.63 (basic and diluted in each case). In the third quarter of the current fiscal year, adjusted earnings per share³ (diluted) was €0.68, compared with €0.69 in the second quarter of the current 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 – rose from €565 million in the second quarter of the current fiscal year to €768 million in the third quarter. Depreciation and amortization in the third quarter of the 2023 fiscal year amounted to €441 million, compared with €434 million in the second quarter of the 2023 fiscal year.

Free Cash Flow improved in the third quarter of the current fiscal year to €326 million from €193 million in the prior quarter. Cash flow from operating activities rose to €1,033 million from €647 million in the second quarter of the 2023 fiscal year.

The gross cash position at the end of the third quarter of the current fiscal year was €2,986 million, compared with €3,446 million at 31 March 2023. Financial debt decreased from €5,428 million at the end of March 2023 to €4,679 million at the end of the third quarter as a result of the scheduled repayment of due capital market liabilities of €752 million. The net cash position at 30 June 2023 was net financial debt of €1,693 million, compared with net financial debt of €1,982 million at the end of the prior quarter.

OUTLOOK FOR THE FOURTH QUARTER OF THE 2023 FISCAL YEAR

Based on an assumed exchange rate of US$1.10 to the euro, Infineon expects to generate revenue of around €4 billion in the fourth quarter of the 2023 fiscal year. Within the four segments, ATV, GIP, PSS and CSS, revenue is expected to remain about stable in the fourth quarter compared with the previous quarter. Based on the revenue forecast for the group, the Segment Result Margin should be around 25 percent. One of the main reasons for this is the increase in idle costs compared with the prior quarter.

OUTLOOK FOR THE 2023 FISCAL YEAR

Infineon expects unchanged to generate revenue of around €16.2 billion in the 2023 fiscal year, based on an assumed exchange rate of US$1.10 to the euro. This is equivalent to a growth rate of 14 percent compared with the 2022 fiscal year. Revenue growth for both the ATV and GIP segments is expected to be above the average rate for the Group. In the CSS segment, revenue is likely to grow at around the average rate for the Group, while revenue in the PSS segment is expected to be lower than in the prior year. Based on expected revenue of around €16.2 billion, it is anticipated that the adjusted gross margin should be around 47 percent and the Segment Result Margin around 27 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 is 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 anticipated to be about €1.8 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 now around €1.2 billion (previously €1.1 billion). Adjusted Free Cash Flow is expected to reach now around €1.7 billion billion (previously €1.8 billion), which is above 10 percent of the forecast revenue for the year of €16.2 billion.

The outlook for Infineon for the 2023 fiscal year is presented without taking into account the planned acquisition of GaN Systems (in particular, not taking into account the purchase price payment), as the transaction is still subject to customary closing conditions, including regulatory approvals.

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 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 3 August 2023 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 2023 fiscal year as well as the outlook for the fourth quarter and the 2023 fiscal year. In addition, the Management Board will host a telephone press 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:

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

INFINEON FINANCIAL CALENDAR (* preliminary)

•   29-39 Aug 2023 Jefferies Annual Semiconductor Conference, Chicago
•   5 Sep 2023 Commerzbank & ODDO BHF Corporate Conference, Frankfurt
• 6-7 Sep 2023  Citi Global Technology Conference, New York
•   13-14 Sep 2023 IoT presentation (PSS, CSS) and roadshow with Adam White, Head of PSS and Thomas Rosteck, Head of CSS, London
•   19 Sep 2023 Berenberg und Goldman Sachs German Corporate Conference, Munich
• 20 Sep 2023  Baader Investment Conference, Munich
•   4-5 Oct 2023 ATV presentation and roadshow with Peter Schiefer, Head of ATV, London
•   15 Nov 2023* Earnings Release for the Fourth Quarter and the
  2023 Fiscal Year
•   16 – 17 Nov 2023 Morgan Stanley European TMT Conference, Barcelona
•   27-28 Nov 2023 Power presentation (GIP, PSS) and roadshow with Peter Wawer, Head of GIP and Adam White, Head of PSS, Paris, London
•   28 – 29 Nov 2023 Credit Suisse TMT Conference, Scottsdale
•   6 Feb 2024* Earnings Release for the First Quarter of the
  2024 Fiscal Year
•   23 Feb 2024* Annual General Meeting

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 https://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.