Shares of Infineon Technologies took a hit in Thursday morning trading as the German chip maker confirmed its targets for the year, disappointing those who were expecting an upgrade. Despite strong demand for its core automotive and industrial end-markets, the company's shares traded 9.2% lower at EUR34.92.
Citi analysts expressed their surprise and disappointment in a note to clients, stating that they had anticipated an increase in guidance, especially regarding the margin. However, Infineon remained steadfast in its targets.
In the three months ending June 30, Infineon reported a revenue of EUR4.09 billion, a 13% increase compared to the previous year. Its automotive business contributed EUR2.13 billion to the total.
While demand remained high in areas such as electromobility and renewable energy, consumer applications like PCs and smartphones continued to have low demand, according to Chief Executive Jochen Hanebeck.
Net profit also experienced growth, climbing from EUR517 million to EUR831 million. Infineon's segment result, a key indicator of profitability, saw an increase from EUR842 million to EUR1.07 billion, equating to a 26.1% margin.
Infineon had initially guided for revenue of around EUR4 billion and a segment result margin of about 26% for its fiscal third quarter. Looking ahead to its fiscal fourth quarter, the company is aiming for revenue of around EUR4 billion and a segment result margin of approximately 25%.
However, Citi analysts noted that these revenue figures fall short of their own estimate of EUR4.2 billion and the Vara consensus of EUR4.1 billion. Similarly, Infineon's segment result margin forecast is lower than Citi's projection of 27.9% and the Vara consensus of 25.8%.
Despite strong end market data and positive results from global peers in the automotive and industrial semiconductor group, Infineon's performance failed to meet expectations. The company remains confident in its long-term prospects, with revenue expectations of EUR16.2 billion and a segment result margin of around 27% for fiscal 2023.
The disappointment among industry analysts is evident, as they note that the bar had been set high for Infineon in light of its previous conference call and the strong results from its peers.
By Mauro Orru