FX.co ★ Infineon Q2 Results Down, Issues Q3 Outlook, Cuts FY24 View; Starting Step Up Program

Infineon Technologies AG, a German semiconductor manufacturer, announced a 52% drop in its second-quarter profit, registering 394 million euros compared to 826 million euros in the prior year. The earnings per share also declined to 0.30 euro from last year's 0.63 euro, while adjusted earnings fell to 0.42 euro from 0.69 euro.

The company's group revenue for the quarter came in at 3.63 billion euros, reflecting a 12% downturn from 4.12 billion euros the previous year, and a sequential 2% fall. Looking into the third quarter, Infineon anticipates an approximate revenue of 3.8 billion euros, with a high-teens percentage range for the Segment Result Margin.

Citing ongoing weak demand in key markets and continuing destocking at direct customers and distributors, Infineon has reduced its fiscal 2024 outlook. The yearly revenue is now predicted to be circa 15.1 billion euros, plus or minus 400 million euros, a decrease from the previously projected 16 billion euros, plus or minus 500 million euros.

The company foresees a Segment Result Margin at around 20% at the mid-point of the guided revenue range, compared to the previous forecast of low to mid-twenties percentage range. The firm also predicts a drop in the adjusted gross margin to the low-forties percentage range from the initially projected low to mid-forties percentage range.

Infineon also announced its initiation of the "Step Up" program, aimed at targeted, sustainable enhancement of its cost structure. This initiative is anticipated to result in a positive effect on the Segment Result to the extent of high triple-digit million euros annually. While the first financial benefits are expected to emerge in the 2025 fiscal year, the program's full impact is predicted to be visible in the first half of the 2027 fiscal year.