Infineon beats expectations on increased margin. Stock rises 7% on improved economic conditions

Autor: Financial Market
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Infineon Technologies AG, one of the largest semiconductor manufacturers worldwide, reported better than expected financial results for the forth quarter 2022 (Q1 FY2023) on strong demand from carmakers, almost half of infineon’s revenues coming from the automotive industry.

In the quarter, group revenue was €3,951 million, but compared with revenue in the prior quarter of €4,143 million, this was a decline of 5%.

Revenue fell in the Automotive, Industrial Power Control and Power & Sensor Systems 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 to 47.2%, from 44.4% in the preceding quarter. The adjusted gross margin also improved, from 46.3% to 49.2% 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% to 28% in the current quarter. Earnings performance is mainly related to positive pricing and mix effects.

Operating profit improved to €966 million, up from €920 million in the previous three-month period.

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Profit from continuing operations was €729 million, compared with €730 million in the preceding quarter.

The profit was €728 million, compared with €735 million in the prior quarter while earnings per share from continuing operations was €0.55, compared with €0.56 in the preceding quarter (basic and diluted in each case).

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.

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.