For the Business and Trade Press: INFXX202011.013e Volker Gieritz (Headquarters) Sian Cummings (Americas) Chi Kang David Ong (Asia-Pacific) Jonathan Liu (Greater China) Yoko Sasaki (Japan) Tel.: +49 89 234 23888 Tel.: +1 310 252 7148 Tel.: +65 6876 3070 Tel.: +86 21 6101 9182 Tel.: +81 3 5745 7340 [email protected][email protected][email protected][email protected][email protected]Investor Relations: Tel.: +49 89 234 26655 [email protected]Press Release Infineon reports strong fourth quarter. Outlook for the new fiscal year cautiously optimistic. Integration of Cypress remains on track Q4 FY 2020: Revenue of €2,490 million; Segment Result €379 million; Segment Result Margin 15.2 percent FY 2020: Revenue of €8,567 million, up 7 percent year-on-year; Segment Result €1,170 million; Segment Result Margin 13.7 percent, organic free cash flow €911 million Outlook for Q1 FY 2021: Based on an assumed exchange rate of US$ 1.15 to the euro, revenue between €2.4 billion and €2.7 billion predicted. At the mid-point of the guided revenue range, Segment Result Margin expected to come in at around 16 percent Outlook for FY 2021: Based on an assumed exchange rate of US$ 1.15 to the euro, revenue of around €10.5 billion (plus or minus 5 percent) expected. At the mid-point of the guided revenue range, Segment Result Margin expected to come in at around 16.5 percent. Investments between €1.4 and 1.5 billion are planned. Free cash flow is expected to exceed €700 million Proposed dividend for FY 2020: €0.22 per share (FY 2019: €0.27); reduction due to impact of corona pandemic and ongoing risks Neubiberg, Germany, 9 November 2020 – Today, Infineon Technologies AG is reporting results for the fourth quarter and for the full 2020 fiscal year, both ended on 30 September 2020. "Infineon has successfully completed an exceptional and difficult fiscal year with a very respectable fourth quarter. We have proven that our company has a robust business model and continues to develop steadily, even in uncertain times," said Dr. Reinhard Ploss, CEO of Infineon. "Some of our target markets, especially the automotive sector, have recovered better than expected since the summer. In addition, the structural transformation towards electro mobility is accelerating, particularly in Europe. Other markets are showing weakness, like traction or government identification, or are still a long way from recovery, such as factory
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For the Business and Trade Press: INFXX202011.013e
Volker Gieritz (Headquarters) Sian Cummings (Americas) Chi Kang David Ong (Asia-Pacific) Jonathan Liu (Greater China) Yoko Sasaki (Japan)
automation. All in all, we are cautiously optimistic for the fiscal year that has just
begun. However, the coronavirus pandemic, the geopolitical situation and
prevailing macroeconomic conditions all remain challenging. The combination of a
strengthened team and a broader technology and product portfolio – especially
through connectivity for the IoT and other digital applications – enables us to
address an even greater number of markets. We are in an excellent position to
master future challenges."
€ in millions (unless otherwise stated) 3 months
ended 30 Sep 20
sequential
+/- in %
3 months ended
30 Jun 20
year-on-year
+/- in %
3 months ended
30 Sep 19
Revenue 2,490 15 2,174 21 2,062
Segment Result 379 72 220 22 311
Segment Result Margin (in %) 15.2% 10.1% 15.1%
Income from continuing operations 112 +++ (128) (31) 163
Income from discontinued operations, net of income taxes
(3) --- - (50) (2)
Net income (loss) 109 +++ (128) (32) 161
Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:1
Basic earnings (loss) per share (in euro) from continuing operations
0.08 +++ (0.11) (38) 0.13
Basic earnings per share (in euro) from discontinued operations
– - – - –
Basic earnings (loss) per share (in euro) 0.08 +++ (0.11) (38) 0.13
Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:1
Diluted earnings (loss) per share (in euro) from continuing operations
0.08 +++ (0.11) (38) 0.13
Diluted earnings per share (in euro) from discontinued operations
– - – - –
Diluted earnings (loss) per share (in euro) 0.08 +++ (0.11) (38) 0.13
Adjusted earnings per share (in euro) – diluted1,2 0.20 54 0.13 5 0.19
Gross margin (in %) 31.8% 27.0% 35.5%
Adjusted gross margin3 (in %) 36.6% 35.9% 36.3%
1 The calculation for earnings per share and adjusted earnings per share is based on unrounded figures. 2 The reconciliation of net income to adjusted net income and adjusted earnings per share is presented on page 14. 3 The reconciliation of cost of goods sold to adjusted cost of goods sold and adjusted gross margin is presented on page 12.
With effect from the beginning of the 2020 fiscal year, Infineon began is applying IFRS 16 (Leases) using the modified retrospective approach. In addition, Cypress Semiconductor Corporation has been fully consolidated since 16 April 2020. For theise reasons, comparability with prior-
year periods is restricted.
Group performance in the fourth quarter of the 2020 fiscal year
Revenue for the three-month period increased from €2,174 million to
€2,490 million quarter-on-quarter. For the first time, the figure includes a full
quarter’s contribution from Cypress Semiconductor Corporation, which Infineon
previous three-month period. Net income totaled €109 million in the fourth quarter,
compared to a net loss of €128 million in the third quarter.
Earnings per share from continuing operations for the fourth quarter of the
2020 fiscal year amounted to €0.08 (basic and diluted), compared to a negative
amount of €0.11 for the previous quarter. Adjusted earnings per share1 (diluted)
also improved, amounting to €0.20 for the three-month period, compared to €0.13
one quarter earlier.
Investments – which Infineon defines as the sum of purchases of property, plant
and equipment, purchases of other intangible assets and capitalized development
costs – increased to €332 million in the fourth quarter of the 2020 fiscal year,
compared with €266 million in the preceding three-month period. At €379 million,
depreciation and amortization remained practically unchanged compared to the
€381 million recorded one quarter earlier.
Free cash flow2 turned around to a positive amount of €387 million in the fourth
quarter, excluding cash outflows in connection with the Cypress acquisition free
cash flow would have amounted to positive €431 million. The figure for the
previous three-month period was a negative amount of €7,137 million, due to the
acquisition of Cypress. Excluding cash outflows used in connection with the
acquisition of Cypress and adjusted for acquired cash, the third-quarter figure
would have been a positive amount of €439 million. Net cash provided by
operating activities from continuing operations increased from €533 million in the
third quarter to €747 million in the fourth quarter.
At the end of the 2020 fiscal year, the gross cash position amounted to
€3,227 million, compared to €3,450 million at 30 June 2020. The main reason for
the lower figure, despite the positive free cash flow, was the early partial
repayment of borrowings amounting to €476 million taken out in connection with
the acquisition of Cypress. The net cash position amounted to a negative amount
of €3,806 million, as compared with negative €4,296 million three months earlier.
Financial debt amounted to €7,033 million as of 30 September 2020, compared
with €7,746 million at the end of the third quarter.
1 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. The detailed calculation of adjusted earnings per share is presented on page 14.
2 For definitions and the calculation of free cash flow and the gross and net cash position, please see page 16.
Segment earnings for the fourth quarter of the 2020 fiscal year
€ in millions (unless otherwise stated)
in % of total
revenue
3 months ended
30 Sep 20
sequential
+/- in %
3 months ended
30 Jun 20
year-on- year
+/- in %
3 months ended
30 Sep 19
Infineon
Revenue 100 2,490 15 2,174 21 2,062
Segment Result 379 72 220 22 311
Segment Result Margin (in %) 15.2% 10.1% 15.1%
Automotive (ATV)
Segment Revenues 42 1,052 29 815 18 893
Segment Result 62 +++ (24) (21) 78
Segment Result Margin (in %) 5.9% (2.9)% 8.7%
Industrial Power Control (IPC)
Segment Revenues 14 349 (5) 366 (4) 362
Segment Result 69 10 63 17 59
Segment Result Margin (in %) 19.8% 17.2% 16.3%
Power & Sensor Systems (PSS)1
Segment Revenues 31 759 11 681 19 639
Segment Result 209 46 143 37 153
Segment Result Margin (in %) 27.5% 21.0% 23.9%
Connected Secure Systems (CSS)2
Segment Revenues 13 326 6 307 +++ 162
Segment Result 39 5 37 77 22
Segment Result Margin (in %) 12.0% 12.1% 13.6%
Other Operating Segments (OOS)
Segment Revenue 0 4 (20) 5 (33) 6
Segment Result 1 - 1 +++ -
Corporate and Eliminations (C&E)
Segment Revenue 0 - - - - -
Segment Result (1) --- - - (1) 1 Effective 1 April 2020, the "Power Management & Multimarktet" segment changed its name to "Power & Sensor Systems". The change in name has no impact on Infineon's organizational structure, strategy or scope of business. 2 The "Digital Security Solutions" segment changed its name to "Connected Secure Systems” with effect from 1 August 2020. The name change reflects the integration of Cypress' “IoT, Compute & Wireless” line of business and the related expansion of the segment’s product portfolio and scope of business.
Revenue generated by the ATV segment for the three-month period ending
September increased from €815 million to €1,052 million quarter-on-quarter. The
29 percent revenue jump was the joint result of a significant recovery in operating
business and the first-time consolidation of the former Cypress businesses for a
complete quarter. Revenue grew across all areas. The upturn in demand was
particularly noticeable in the field of electric vehicles and microcontrollers for
classical vehicle applications and driver assistance systems. Higher revenue drove
the Segment Result upwards from a negative amount of €24 million in the third
quarter to positive €62 million in the fourth quarter. The Segment Result Margin for
the fourth quarter came in at 5.9 percent, compared with negative 2.9 percent for
FINANCIAL INFORMATION According to IFRS – preliminary and unaudited With effect from the beginning of the 2020 fiscal year, Infineon is applying IFRS 16 (Leases) using the modified retrospective approach. In addition, Cypress Semiconductor Corporation has been fully consolidated since 16 April 2020. For these reasons, comparability with prior-year periods is restricted. Consolidated Statement of Profit or Loss
€ in millions (unless otherwise stated) 3 months ended 12 months ended
30 Sep 20 30 Jun 20 30 Sep 19 30 Sep 20 30 Sep 19
Revenue 2,490 2,174 2,062 8,567 8,029
Cost of goods sold (1,697) (1,587) (1,331) (5,791) (5,035)
Gross profit 793 587 731 2,776 2,994
Research and development expenses (308) (321) (230) (1,113) (945)
Selling, general and administrative expenses (308) (316) (222) (1,042) (865)
Other operating income 24 9 14 76 56
Other operating expenses (19) (52) (47) (116) (79)
Operating income (loss) 182 (93) 246 581 1,161
Financial income 17 3 9 29 26
Financial expenses (45) (82) (27) (177) (98) Gain from investments accounted for using the equity method
(9) - (1) (9) (6)
Income (loss) from continuing operations before income taxes
145 (172) 227 424 1,083
Income tax (33) 44 (64) (52) (194)
Income (loss) from continuing operations 112 (128) 163 372 889
Loss from discontinued operations, net of income taxes
(3) - (2) (4) (19)
Net income (loss) 109 (128) 161 368 870
Attributable to:
Shareholders of Infineon Technologies AG 109 (128) 161 368 870
Basic earnings per share (in euro) attributable to shareholders and hybrid capital investors of Infineon Technologies AG:1
Weighted average shares outstanding (in million) – basic
1,301 1,266 1,244 1,265 1,163
Weighted average shares outstanding (in million) – diluted
1,302 1,266 1,246 1,266 1,165
Earnings (loss) per share (in euro) from continuing operations - basic/diluted
0.08 (0.11) 0.13 0.26 0.77
Earnings (loss) per share (in euro) from discontinued operations - basic/diluted
- - - - (0.02)
Earnings per share (in euro) - basic/diluted 0.08 (0.11) 0.13 0.26 0.75
1 The calculation of earnings per share is based on unrounded figures. For the consideration of the compensation entitlement of hybrid capital investors when determining earnings per share, see “Reconciliation to adjusted earnings and adjusted earnings per share” on page 14.
Reconciliation to adjusted cost of goods sold and gross margin
The cost of goods sold and the gross margin in accordance with IFRS are influenced by amounts relating to purchase price allocations for acquisitions (in particular Cypress and International Rectifier) as well as by other exceptional items. To enable better comparability of operating performance over time, Infineon computes the adjusted gross margin as follows:
€ in millions (unless otherwise stated) 3 months ended 12 months ended
Acquisition-related depreciation/amortization and other expenses
(111) (183) (13) (316) (56)
Other income and expense, net (7) (9) (3) (32) (4)
Adjusted cost of goods sold 1,579 1,394 1,314 5,441 4,973
Adjusted gross margin (in %) 36.6% 35.9% 36.3% 36.5% 38.1%
Adjusted cost of goods sold and the adjusted gross margin should not be seen as a replacement or superior performance indicator, but rather as additional information to cost of goods sold and the gross margin determined in accordance with IFRS.
Employees
30 Sep 20 30 Jun 20 30 Sep 19
Infineon 46,665 46,730 41,418
Thereof: Research and development 9,262 9,494 7,755
1 Greater China comprises Mainland China, Hong Kong and Taiwan.
In the course of the 2020 fiscal year, Infineon adapted its reporting to the usual geographical designations for the subregions of China. Accordingly, the term "Mainland China, Hong Kong" is now used instead of the former term "China". When reporting the quarterly figures for the second and third quarters of the 2020 fiscal year, only the term "Mainland China" was erroneously used. However, the figures also included the revenue contribution from Hong Kong.
Segment Revenues and Segment Results Segment Result is defined as operating income (loss) excluding certain impairment losses (such as in particular impairment losses on goodwill), impact on earnings of restructuring and closures, share-based compensation, acquisition-related depreciation/amortization and other expenses, gains (losses) on sales of businesses, or interests in subsidiaries and other income (expense), including litigation costs.
Revenues and Segment Result for the three and twelve months ended 30 September 2020 and 2019 Effective 1 April 2020, the " Power Management & Multimarket" segment changed its name to " Power & Sensor Systems". The change in name has no impact on Infineon's organizational structure, strategy or scope of business. The "Digital Security Solutions" segment changed its name to "Connected Secure Systems” with effect from 1 August 2020. The name change reflects the integration of Cypress' “IoT, Compute & Wireless” line of business and the related expansion of the segment’s product portfolio and scope of business.
Revenue, € in millions (unless otherwise stated)
3 months ended 12 months ended
30 Sep 20 30 Sep 19 +/- in % 30 Sep 20 30 Sep 19 +/- in %
Automotive 1,052 893 18 3,542 3,503 1
Industrial Power Control 349 362 (4) 1,406 1,418 (1)
Power & Sensor Systems 759 639 19 2,650 2,445 8
Connected Secure Systems 326 162 +++ 953 642 48
Other Operating Segments 4 6 (33) 16 21 (24)
Corporate and Eliminations - - - - - -
Total 2,490 2,062 21 8,567 8,029 7
Segment Result, € in millions (unless otherwise stated)
3 months ended 12 months ended
30 Sep 20 30 Sep 19 +/- in % 30 Sep 20 30 Sep 19 +/- in %
Automotive 62 78 (21) 155 404 (62)
Industrial Power Control 69 59 17 256 251 2
Power & Sensor Systems 209 153 37 636 585 9
Connected Secure Systems 39 22 77 122 77 58
Other Operating Segments 1 - +++ 3 4 (25)
Corporate and Eliminations (1) (1) - (2) (2) -
Total 379 311 22 1,170 1,319 (11)
Segment Result Margin (in %) 15.2% 15.1% 13.7% 16.4%
Reconciliation of Segment Result to Operating Income
€ in millions 3 months ended 12 months ended
30 Sep 20 30 Jun 20 30 Sep 19 30 Sep 20 30 Sep 19
Segment Result 379 220 311 1,170 1,319
Plus/minus:
Impairments (in particular on goodwill), net of reversals
11 - -
11 -
Impact on earnings of restructuring and closures, net
(20) - -
(20) -
Share-based compensation (4) (4) (3) (14) (11)
Acquisition-related depreciation/amortization and other expenses
(182) (299) (31)
(540) (114)
Gains (losses) on sales of businesses, or interests in subsidiaries, net
- - -
1 (1)
Other income and expenses, net (2) (10) (31) (27) (32)
Operating income 182 (93) 246 581 1,161
Reconciliation to adjusted earnings and adjusted earnings per share – diluted Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations for acquisitions (in particular Cypress and International Rectifier), one-time effects in the financial result in connection with the acquisition of Cypress as well as by other exceptional items. To enable better comparability of operating performance over time, Infineon computes adjusted earnings per share (diluted) as follows:
€ in millions (unless otherwise stated) 3 months ended 12 months ended
30 Sep 20 30 Jun 20 30 Sep 19 30 Sep 20 30 Sep 19
Income (loss) from continuing operations – diluted 112 (128) 163 372 889
Compensation claims of hybrid capital investors1 (8) (10) - (35) -
Income (loss) from continuing operations,
attributable to shareholders of Infineon Technologies AG – diluted
104 (138) 163 337 889
Plus/minus:
Impairments (in particular on goodwill), net of reversals
(11) - - (11) -
Impact on earnings of restructuring and closures, net
20 - - 20 -
Share-based compensation 4 4 3 14 11 Acquisition-related depreciation/amortization and other expenses
182 299 31 540 114
Losses (gains) on sales of businesses, or interests in subsidiaries, net
- - - (1) 1
Other income and expense, net 2 10 31 27 32
Acquisition-related expenses within financial result 22 17 2 49 27
Tax effects on adjustments (48) (62) (5) (126) (30)
Revaluation of deferred tax assets resulting from the annually updated earnings forecast
(13) 39 7 (35) (3)
Adjusted net income from continuing operations attributable to shareholders of Infineon Technologies AG – diluted
262 169 232 814 1,041
Weighted-average number of shares outstanding (in million) – diluted
1,302 1,266 1,246 1,266 1,165
Adjusted earnings per share (in euro) – diluted2 0.20 0.13 0.19 0.64 0.89
1 Including the cumulative tax effects. 2 The calculation of the adjusted earnings per share is based on unrounded figures. 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.
Gross and Net Cash Position The following table reconciles the gross cash position and net cash position (i.e. after deduction of financial debt). Since some liquid funds are held in the form of financial investments, which for IFRS purposes are not considered to be “cash and cash equivalents”, Infineon reports on its gross and net cash positions in order to provide investors with a better understanding of Infineon’s overall liquidity. The gross and net cash positions are determined as follows from the Consolidated Statement of Financial Position:
€ in millions 30 Sep
20
30 Jun 20
30 Sep
19
Cash and cash equivalents 1,851 2,449 1,021
Financial investments 1,376 1,001 2,758
Gross cash position 3,227 3,450 3,779
Less:
Short-term financial debt and current portion of long-term financial debt 505 586 22
Long-term financial debt 6,528 7,160 1,534
Total financial debt 7,033 7,746 1,556
Net cash position (3,806) (4,296) 2,223
Free Cash Flow Infineon reports the free cash flow figure defined as net cash provided by and/or used in operating activities and net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement or superior performance indicator, but rather as an additional useful piece of information over and above the disclosure of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to other liquidity performance indicators and other performance indicators derived from the IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived as follows from the Consolidated Statement of Cash Flows:
€ in millions 3 months ended 12 months ended
30 Sep 20 30 Jun 20 30 Sep 19 30 Sep 20 30 Sep 19
Net cash provided by operating activities from continuing operations
747 533 682 1,817 1,603
Net cash used in investing activities from continuing operations
(735) (5,208) (377) (7,172) (2,488)
Purchases of (proceeds from sales of) financial investments, net
Income (loss) from continuing operations 112 (128) 163 372 889
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 379 381 244 1,260 945
Other expenses and income 68 42 71 201 242
Change in assets, liabilities and equity 250 248 205 164 (306)
Interest received and paid (22) (71) (1) (112) (42)
Income tax paid (40) 61 - (68) (125)
Net cash provided by operating activities from continuing operations
747 533 682 1,817 1,603
Net cash provided by (used in) operating activities from discontinued operations
(1) (1) 2 (6) (2)
Net cash provided by operating activities 746 532 684 1,811 1,601
Proceeds from sales/purchases of financial investments
(375) 2,462 (29) 1,372 (924)
Acquisitions of businesses, net of cash acquired (29) (7,404) - (7,433) (123) Purchases of other intangible assets and other assets (57) (49) (44) (184) (156) Purchases of property, plant and equipment (275) (217) (306) (915) (1,295)
Other investing activities 1 - 2 (12) 10
Net cash used in investing activities (735) (5,208) (377) (7,172) (2,488)
Proceeds from issuance/repayment of short-/long-term financial debt
(539) 4,996 (11) 4,443 (22)
Proceeds from hybrid capital/cash outflow to hybrid capital investors
- (20) - 1,164 -
Proceeds from issuance of ordinary shares (1) 1,042 2 1,043 1,530
Dividend payments - - - (336) (305)
Other financing activities (26) 12 - (40) (36)
Net cash provided by (used in) financing activities (566) 6,030 (9) 6,274 1,167
Net change in cash and cash equivalents (555) 1,354 298 913 280 Effect of foreign exchange rate changes on cash and cash equivalents
(43) (34) 1 (83) 9
Cash and cash equivalents at beginning of period 2,449 1,129 722 1,021 732
Cash and cash equivalents at end of period 1,851 2,449 1,021 1,851 1,021
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.