Infineon Raises Full-Year Profit, Sales Outlook on Demand
By Cornelius Rahn - May 3, 2011 9:48 AM GMT+0200
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Business ExchangeBuzz up!DiggPrint Email . Infineon Technologies AG Chief Executive Officer Peter Bauer. Photographer: Guenter Schiffmann
Play Video(Corrects to say Infineon is Europe's second largest chipmaker.) March 7 (Bloomberg) -- Peter Bauer, chief executive officer of Infineon Technologies AG, talks about the outlook for the company's profitability and demand for its products. Infineon is Europe's second largest chipmaker. Bauer spoke on March 4 with Emily Chang and Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
Infineon, based in Neubiberg, Germany, is selling more chips used in cars and lighting equipment as the global economic recovery gathers pace. Photographer: Guenter Schiffmann/Bloomberg
Infineon Technologies AG (IFX), Europe’s second-largest chipmaker, raised its full-year forecast for the fifth time since the beginning of 2010 as second-quarter revenue and profit surged on higher demand.
Sales in the 12 months through September will gain 20 percent from 3.3 billion euros ($4.9 billion) a year earlier and operating profit will be “broadly in line” with the 19.8 percent of revenue achieved in the first half, Infineon said in a statement today. The company so far had predicted that sales would rise by a mid-teens percentage and the operating profit margin would gain by a high-teens percentage.
“All divisions were making strong contributions to a result that was better than expected,” Lionel Pellicer, an analyst at AlphaValue in Paris with a “reduce” recommendation on the shares, said by phone. “Order intake is strong and shows why the company’s confidence is high.”
Infineon, based in Neubiberg, Germany, is selling more chips used in cars and lighting equipment as the global economic recovery gathers pace. Intel Corp. (INTC), the world’s biggest semiconductor producer, in April forecast sales for its second quarter that may top analyst estimates. Sales and profit will be “broadly flat” in the third fiscal quarter, Infineon said today.
The level of new orders and the order backlog is prompting Infineon to consider raising its budget for investments this year, which currently stands at 700 million euros ($1 billion), the company said. Last year, investments totaled 325 million euros.
Rising Profit
The shares rose as much as 1.7 percent to 7.874 euros in Frankfurt trading today and were up 0.8 percent as of 9:35 a.m. They have gained 12 percent this year, valuing Infineon at 8.5 billion euros.
Second-quarter net income more than doubled from the previous quarter to 572 million euros. That exceeded the 554 million-euro median estimate by three analysts surveyed by Bloomberg. Profit was boosted by an after-tax gain of 378 million euros related to the sale of the wireless mobile-phone business to Intel, which closed during the quarter. Sales gained 7.8 percent to 994 million euros from the previous quarter.
Infineon’s sales forecast assumes a euro exchange rate of $1.40. The European currency was trading at $1.483 as of 9:17 a.m. Frankfurt time.
The company said it is “monitoring closely” the impact of the March 11 earthquake in Japan and its aftermath on Infineon’s supply chain and market. While “risks remain” with regard to raw-material supply and the ability of customers to get all components they need, the company hasn’t experienced any disruptions, according to the statement.
Overhaul
“This quarter proved once again that focusing on energy efficiency, mobility and security is the right strategy,” Infineon Chief Executive Officer Peter Bauer said in the statement. “With our system expertise and highly innovative products we will further enlarge our footprint in these fast- growing markets.”
Bauer, who took over as CEO almost three years ago, has finished an overhaul that included the spinoff of unprofitable memory-chip unit Qimonda in 2006 and the sale of a mobile-phone component division to Intel announced in August. The German company has been profitable at a net level every quarter since the three months ended Sept. 30, 2009.
Infineon’s remaining units produce chips for vehicles, wind turbines, household appliances, lighting systems and identity cards. Infineon trails the European leader in semiconductors, STMicroelectronics NV (STM), in sales.
Bauer has said that the company has 2.7 billion euros in funds following the sale of the wireless unit. He said that money will be spent on expanding current operations and returning money to shareholders, with some funds reserved for acquisitions.