Infineon second-quarter oper profit slightly below expectations

Reuters News
Posted: May 04, 2017 3:17 AM

By Harro Ten Wolde

FRANKFURT (Reuters) - German chipmaker Infineon <IFXGn.DE> on Thursday stuck with its full-year guidance, which it raised in March, after reporting slightly weaker-than-expected quarterly operating profit.

The maker of chips that enable cruise control in cars and warn drivers of potential collisions said operating profit excluding special items rose to 296 million euros ($322 million) in the fiscal second quarter.

That was slightly below the average forecast for 299 million euros in a Reuters poll, in which individual estimates of 11 analysts ranged from 273 million euros to 303 million.

Infineon said it still expected full-year revenue to rise by 8 to 11 percent, with an operating margin of around 17 percent.

"The favorable market development we saw in the first quarter of the fiscal year has continued into the second three-month period. Current order situation gives us good reason for optimism," Chief Executive Reinhard Ploss said in a statement.

Infineon, whose customers include premium carmakers such as Daimler <DAIGn.DE> and Tesla <TSLA.O> as well as automotive supplier Continental <CONG.DE>, in March raised its full-year guidance on the back of strong demand from China for its automotive chips.

Since that announcement, Infineon's shares have gained more than 10 percent and hover around a 15-year high.

Sales at Infineon's automotive unit grew by 11 percent to 783 million euros in the second quarter, accounting for 44 percent of group sales.

"The increase was attributable to growing demand in all product areas, particularly also for components installed in driver assistance systems as well as hybrid and electric vehicles," the company said.

Just like other chipmakers, Infineon is benefiting from a rise in automakers' spending on electric and self-driving cars as they feel the pressure from new competitors from outside the sector such as Alphabet's <GOOGL.O> Google and Apple <AAPL.O>.

Earlier STMicroelectronics <STM.PA> and Texas Instruments <TXN.O> reported a rise in profits on the back of spending on chips which enable all kinds of devices and cars to connect to the Internet.

Infineon shares are indicated to open 1.3 percent lower, according to pre-market date of brokerage Lang & Schwarz, at the bottom of the German blue chip index <.GDAXI>, which is expected to open 0.2 percent higher.

(Reporting by Harro ten Wolde; Editing by Ludwig Burger)