Infineon Reports Record 2022 Fiscal Year

Infineon Technologies AG is increasing its target operating model and reporting its results for the fourth quarter and for the full fiscal year, both of which ended on Sept. 30, 2022.

Here are some of the highlights:
• Future target operating model: More than 10% revenue growth (previously 9% +), 25% segment result margin (previously 19%), 10 to 15% adjusted free cash flow of revenue, in each case over the cycle.
• Expansion of manufacturing: Supervisory board approves further planning for the construction of a new factory for 300-millimeter analog/mixed-signal and power semiconductors for about €5 billion; planned location is Dresden (Germany), subject to adequate public funding.
• Q4 FY 2022: Revenue €4.143 billion, segment result €1.058 billion, segment result margin 25.5%, free cash flow €709 million.
• FY 2022: Revenue €14.218 billion, up 29% on the prior year;
segment result €3.378 billion, up 63% year on year; segment result margin 23.8% (previous year: 18.7%); free cash flow €1.648 billion (previous year: €1.574 billion).
• Outlook for Q1 FY 2023: Based on an assumed exchange rate of US$1.00 to the euro, revenue of around €4.0 billion predicted. On this basis, segment result margin forecast to be around 25%.
• Outlook for FY 2023: Based on an assumed exchange rate of US$1.00 to the euro, revenue of around €15.5 billion (plus or minus €500 million) anticipated for the 2023 fiscal year, with an adjusted gross margin of around 45% and a segment result margin of around 24% at the mid-point of the guided revenue range. Investments of approximately €3.0 billion planned. Taking the planned expansion in frontend buildings into account, free cash flow is expected to be around €0.8 billion, adjusted free cash flow should come in around €1.5 billion.
• Dividend proposal for FY 2022: Increase from €0.27 to €0.32 per share.
   
“Decarbonization and digitalization are causing structurally increasing demand for semiconductors. Infineon will benefit disproportionately from this development thanks to its strategic positioning. This dynamic has further accelerated, so now is the right time for us to define an even more ambitious target operating model,” said Jochen Hanebeck, CEO of Infineon.

“Furthermore, by the planned investment in a new factory, we are continuing the consistent execution of our strategy and are broadening the base for our accelerated profitable growth trajectory in a forward-looking way,” Hanebeck continued. “We are pleased to have political support for an investment at the Dresden site (Germany) and we are counting on adequate funding through the European Chips Act. We concluded the challenging 2022 fiscal year very successfully, with an excellent fourth quarter. The 2023 fiscal year has also started well. In view of ongoing macroeconomic and geopolitical uncertainties, heightened vigilance is required in the coming quarters. We are prepared to act swiftly and flexibly if necessary.”

In its target markets automotive, industrial and IoT applications, as well as renewable energies Infineon sees increasing dynamic and strong structural growth drivers. The company is therefore upgrading its target operating model, which defines financial targets over the cycle.

In the future, based on an exchange rate of US$1.00 to the euro, the expected average rate of revenue growth will be more than 10%, increased from 9% + previously. Growth will in particular be driven by electromobility, autonomous driving, renewable energies, data centers and IoT, such growth being accompanied by a significant improvement in profitability: the segment result margin is expected to reach an average level of 25%, compared with 19% to date.

Infineon is planning to continue expanding its 300-millimeter manufacturing capacity, to enable the expected acceleration in growth of analog/mixed-signal and power semiconductors. The intended location is Dresden, Germany. Adequate public funding is required for the investment decision. With a planned total investment of €5 billion, this would be the largest single investment in Infineon’s history.

When operating at full capacity, the planned factory would have the potential to generate annual revenue equal to the level of the investment. The new factory is expected to create up to 1,000 new highly qualified jobs and according to planning could be ready to start production in autumn of 2026.