Infineon profits jump on strong car industry demand
HELSINKI (Reuters) - German chipmaker Infineon Technologies AG reported higher-than-expected quarterly profit and sales on strong demand from automotive and industrial customers.
Infineon forecast sales in the current quarter to be the same or better than the last quarter while operating profit would be flat. This contrasted with its peers which have recently forecast weaker sales due to sluggish consumer demand.
Infineon, which makes chips for products ranging from cars to electronic passports, said its fiscal third-quarter sales rose 5 percent to 1.04 billion euros ($1.5 billion), while net profit jumped 51 percent from a year ago to 190 million.
"These are good results," said a trader in Frankfurt.
Analysts on average expected revenue of 1.01 billion euros in the quarter, while their net profit estimates ranged from 156 million to 189 million, according to a Reuters poll.
Shares in the company opened higher, but later dropped after failing to break through a resistance level. Shares were 2.8 percent lower at 7 euros by 1240 GMT, while the blue-chip DAX index was down 1.5 percent, with only a handful of gainers.
"At its daily high the stock touched the 200-day moving average but it did not surpass the resistance level," a Frankfurt-based trader said.
Infineon said sales and profits at its automotive unit were not significantly hit by disruptions within the automotive supply chain after the Japan earthquake.
Infineon is Europe's biggest supplier of automotive chips, which are found in two out of three cars worldwide, used for anything from fuel injection to power management for electric cars. The autos segment generates 40 percent of its sales.
German carmakers Volkswagen and Daimler have reported a sharp rise in sales mainly thanks to a surge in demand in emerging markets.
Infineon said the quarterly forecast implied a slight hike in its outlook for the full-year through September, with sales now seen up more than 20 percent and the profit margin roughly at 20 percent. It had earlier forecast 20 percent sales growth with a 19.8 percent margin.
MORE STABLE PERFORMER
Despite strong earnings from Intel and Freescale, concerns over the financial crisis in Europe, higher inventories and sluggish PC sales have weighed on chip stocks.
Earlier this week Infineon's larger European rival STMicroelectronics warned its revenue could slip in the three months to end-September.
Infineon was spun off from engineering group Siemens more than a decade ago and last year chose to exit the mobile chip business by selling its wireless chip unit to Intel.
It has since decided to focus on three areas -- automotive, industrial & multimarket and chip card security -- to reduce its exposure to volatile consumer trends.
"We believe that today's report will be a further step in convincing the market that Infineon has become a less volatile and more reliable player in the semiconductor market," said Silvia Quandt analyst Eerik Budarz.
Infineon also said it decided to invest some 250 million euros by 2014 in Dresden, Germany to set up a plant for mass manufacturing of power semiconductors on 300 millimeter wafers.
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