Infineon; Downgraded Outlook, Cash Outflows, Credit Tighter YTD.

Infineon (IFX GY) reported 1Q24 (3M to 31-Dec-23) which missed on revenues but a better margin outturn meant profit consensus was hit. Outlook is downgraded and net cash has worsened in the period – not great for the credit, we fear, against a cash curve which has tightened YTD.

• Revenues in 1Q24 were 11% lower q/q and 6% lower than 1Q23 which is c.3% lower than consensus (which had been gently trimmed into results, too). Automotive was weak within this, reflecting some of the China EV news we’ve seen recently. The gross margin was 40bp lower q/q, less bad than expected so net profit of EUR587m was ahead of consensus (of 557m).
• In credit terms, net cash has weakened meaningfully in the period (to net debt of EUR2.7bn from 1.1bn). FCF was weak on a working capital build in the period along with some acquisition outflows.
• Revenue expectations are now lowered (to EUR16bn from 17bn for FY24, consensus is 16.8bn), some of which is FX-related, and gross margin is expected to be “low-to-mid 40s”.

Conf call is 0830 London time , available at https://webcast2.promeas.com/240206ifx-ir/player/index.en.php