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UPDATE 2-Infineon ups 2013 outlook as markets pick up
July 30, 2013 / 6:26 AM / in 4 years

UPDATE 2-Infineon ups 2013 outlook as markets pick up

* Q3 core profit 117 mln euros vs 104 mln in Reuters poll

* Sees 2013 revenue at about 3.85 bln euros

* Shares up 4.8 pct, one of top gainers in sector index

By Harro Ten Wolde

FRANKFURT, July 30 (Reuters) - German chipmaker Infineon raised its full-year outlook as demand from industrial customers improved and its major automotive customers continued to buy up chips.

“We are now in a position to quickly and decisively take advantage of opportunities as markets pick up,” Infineon’s Chief Executive Reinhard Ploss said in a statement on Tuesday .

The company, whose chips activate airbags, enable cruise control and cut emissions, has been riding a global trend to make cars safer, cleaner and more energy efficient.

Sales at the automotive unit, which accounts for almost half of Infineon’s sales, are expected to be flat in the current quarter, but the company said its other operations, catering for industrial clients such as Siemens, will show growth.

The Neubiberg, southern Germany-based company said it now expected full-year revenue of 3.85 billion euros ($5.09 billion), a drop of about 1.5 percent.

That is at the high end of analysts’ expectations for 3.78 billion euros and compares with Infineon’s earlier revenue outlook for the high end of 3.56-3.71 billion euros.

Infineon shares were up 4.8 percent in early trade, one of the top gainers in a 0.7 percent stronger European technology index.

The company also raised the outlook for its core operating profit margin to just under 10 percent from a previous outlook for the upper end of a 5-9 percent range.

“Infineon reported a good set of figures and gave a stronger than expected outlook,” said DZ Bank analyst Harald Schnitzer, adding he would review his estimates, while sticking to his “buy” recommendation.

Infineon shares are up almost 20 percent so far this year, outperforming a 10 percent higher sector index.

The shares have risen on the back of reports from key peers such as STMicroelectronics, Texas Instruments and Fairchild Semiconductors all signalling that orders from its industrial customers continue to improve.

Operating profit, excluding special items, for the three months to June fell 7 percent to 117 million euros ($155.07 million) compared with the year-earlier period, beating the most optimistic forecast for 109 million euros in a Reuters poll.

Infineon is cutting costs through measures such as temporarily switching off underutilised equipment, cutting staff costs and introducing shorter working hours, targeting 100 million euros in annual savings.

Infineon has also more than halved investment for the current fiscal year to just below 400 million euros.

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