FX.co ★ Infineon Q3 Results Drop, Cuts FY24 Revenue Outlook, To Cut Jobs; Stock Up

On Monday, German semiconductor manufacturer Infineon Technologies AG revised down its revenue forecast for fiscal 2024 while maintaining its margin projection, following a decline in profit and revenue for the third quarter due to a challenging economic environment. The company also provided an improved quarter-on-quarter revenue and margin outlook for the fourth quarter.

According to a Reuters report citing Infineon CEO Jochen Hanebeck, the company plans to reduce its workforce by 1,400 positions globally and will relocate an additional 1,400 jobs to countries with lower labor costs.

In Germany, Infineon's shares were trading at 30.39 euros, reflecting a 2.9 percent increase.

In the earnings statement, Hanebeck commented, "In a market environment that remains challenging, Infineon continues to hold up well. The recovery in our target markets is progressing only slowly. Prolonged weak economic momentum has resulted in inventory levels in many areas overlaying end demand. In addition to managing the current demand cycle, we are working on further strengthening our competitiveness through the 'Step Up' structural improvement program."

For the fourth quarter, the company anticipates revenue of approximately 4.0 billion euros and a Segment Result Margin of around 20 percent. It is expected that revenue will increase sequentially across all four segments.

For fiscal 2024, Infineon projects revenue to be around 15.0 billion euros. Previously, while announcing second-quarter results, the company had anticipated revenues to be around 15.1 billion euros, with a variance of plus or minus 400 million euros.

The adjusted gross margin is still expected to remain in the low-forties percentage range, with the Segment Result Margin projected to be around 20 percent.

In the Automotive segment, revenue growth for the year is forecast to be approximately 3 percent. However, revenue in the Green Industrial Power segment is expected to decrease by a low-teen percentage, while the Power & Sensor Systems segment is anticipated to see a high-teen percentage decline. The Connected Secure Systems segment is projected to experience a mid-twenties percentage drop in revenue.

For the third quarter, Infineon's profit fell by 52 percent to 403 million euros, compared to the previous year's 831 million euros. Earnings per share from continuing operations decreased to 0.30 euro from last year's 0.63 euro.

Adjusted profit attributable to shareholders was 557 million euros, down from 887 million euros a year ago. Adjusted earnings per share fell to 0.43 euro, compared to 0.68 euro in the prior year quarter.

The Segment Result decreased by 31 percent from the previous year to 734 million euros, while the Segment Result Margin dropped to 19.8 percent from 26.1 percent a year ago.

Group revenue declined by 9 percent to 3.70 billion euros from the prior year's 4.09 billion euros. However, sequentially, Group revenue improved by 2 percent.

Revenue in the Automotive segment was 2.11 billion euros, down 1 percent from last year, and its Segment Result Margin decreased to 25.4 percent from 27.4 percent a year ago. Revenues fell by 16 percent in the Green Industrial Power segment, 18 percent in the Power & Sensor Systems segment, and 23 percent in the Connected Secure Systems segment.