Infineon Expected to Post Lower Sales, Earnings Amid Weak Chip Market -- Earnings Preview

Dow Jones2025-02-03

By Mauro Orru

Infineon Technologies is scheduled to report results for its fiscal first quarter on Tuesday. Here is what you need to know:

REVENUE FORECAST: The German chip maker is expected to post revenue of nearly 3.23 billion euros ($3.35 billion) in the three months to the end of December, according to a Vara Research consensus. The forecast is lower than revenue of 3.70 billion euros that Infineon reported a year earlier. Infineon had guided for revenue of around 3.2 billion euros in the quarter.

EARNINGS FORECASTS: Net profit is expected to come down to 252 million euros from 587 million euros, according to the Vara Research consensus. Infineon's segment result, a key profitability metric, should decline to 477 million euros from 831 million euros, generating a 14.8% margin. Infineon had guided for a margin in the mid-teens percentage range.

Infineon shares are down nearly 7% over the last 12 months.

WHAT TO WATCH:

--GUIDANCE: Investors will be on the lookout for any change that Infineon could make to its revenue and segment result margin guidance for the fiscal year to the end of September. JPMorgan analysts wrote in a note to clients that weakness in the automotive market and a delay in the recovery across industrials remain headwinds for the company.

Infineon is forecasting a slight decline in sales this fiscal year from the 14.96 billion euros it reported for fiscal 2024. Infineon's segment result margin--a key profitability measure--is expected to be in the mid-to-high-teens percentage range compared with the 20.8% margin it reported in fiscal 2024.

--DEMAND TRENDS: The market will also be monitoring remarks from Infineon on demand in its end-markets. JPMorgan analysts wrote in a note to clients that weakness in the automotive market and a delay in the recovery across industrials remain headwinds for the company.

Orders for chips to power the data centers behind the artificial-intelligence boom are thriving, but demand for legacy semiconductors found in cars and industrial equipment has been subdued in recent months. Car makers and manufacturers of industrial machinery cut spending on chips because they stockpiled the semiconductors they needed years ago.

That divergence in demand between AI chips and legacy semiconductors meant that chip makers with significant AI exposure like Nvidia have grown exponentially, while companies such as Infineon that mostly sell chips to the automotive sector and makers of industrial equipment have struggled.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

February 03, 2025 10:53 ET (15:53 GMT)

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