Infineon cuts jobs and revenue guidance after Q3 miss
Nearly 3,000 jobs to be cut or relocated
Third FY revenue guidance downgrade in recent months
Automotive segment sales up slightly vs Q2
Rewrites with jobs cuts, adds detail on automotive segment
By Hakan Ersen and Miranda Murray
BERLIN, Aug 5 (Reuters) -Infineon IFXGn.DE will cut 1,400 jobs and relocate 1,400 more, its CEO said on Monday, after third-quarter revenue missed expectations, prompting the German chipmaker to downgrade its full-year forecast for the third time in just a few months.
The firm, which has around 58,600 staff worldwide according to its website, narrowed its annual revenue guidance to around 15 billion euros ($16 billion), having already twice lowered it, most recently to 15.1 billion euros, plus or minus 400 million.
Revenue for the April-June quarter came in at 3.702 billion euros, short of the 3.8 billion forecast in a company-provided consensus and down 9% on the year. Net profit was 403 million euros, also missing the consensus forecast of 447 million.
"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," said Chief Executive Jochen Hanebeck.
As part of the previously announced "Step Up" cost savings programme, the company plans to cut 1,400 jobs worldwide and relocate a further 1,400 positions to countries with lower labour costs, Hanebeck said on a call after the results.
Infineon shares fell almost 6% in early trade, but by 0830 GMT had recovered to trade up 0.8%.
Jefferies analyst Janardan Menon said the so-called segment result - management's preferred measure of operating profitability - of 734 million euros exceeded his expectations, and that it was positive the company was forecasting growth in all business areas in the fourth quarter versus the third.
DZ Bank's Dirk Schlamp was also relieved there were no major negative surprises, amid weak results from rivals. STMicroelectronics STMPA.PA cut its full-year revenue and margin guidance, while U.S. heavyweight Intel INTC.O suspended its dividend and is slashing jobs to fund a turnaround plan.
Infineon kept its outlook for the segment result margin after it came in above expectations in the quarter at 19.8%.
"In a market environment that remains challenging, Infineon continues to hold up well," said Hanebeck.
The Step Up programme, announced in May, should start to have a positive impact on the segment - or adjusted - result in the company's 2025 fiscal year, he added.
Revenue in the automotive segment, a weak spot for the industry, rose slightly quarter on quarter to 2.11 billion euros, as stronger demand in "software-defined vehicles" helped micro-controllers business in particular, Infineon said.
($1 = 0.9153 euros)
Reporting by Hakan Ersen and Miranda Murray, Editing by Kirsten Donovan and Mark Potter
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
