FRANKFURT (Reuters) - Germany’s Infineon Technologies raised its full-year outlook on Wednesday as strong demand for electric vehicles in the automotive sector drove growth.
Infineon, along with European semiconductor players like STMicroelectronics, is riding the electric-vehicle boom and the development of power-management applications for everything from smartphones to handheld drills.
“The automotive business does well. Electro-mobility in particular is driving growth,” Infineon chief executive Reinhard Ploss said, adding that a stronger dollar had created tailwinds.
The Munich-based firm, whose main product line is high-end power management chips, said it was confident in its forecast for 10 percent revenue growth in the 2019 fiscal year.
Chief Financial Officer Dominik Assam told analysts on a call it was premature to talk about raising the outlook for next year following the strong results, adding that Infineon would update its guidance in November.
With its order books brimming, Infineon said it was well insulated from any trade frictions or a possible downturn in the world economy.
That’s because the amount of its products in each car was far more important than overall car sales, Ploss said, adding that Infineon saw “unabated momentum”.
U.S. President Donald Trump’s trade policies had not yet had any impact on the automakers that Infineon supplies, he added. At a recent U.S.-European summit Trump pulled back on a threat to impose tariffs on European car imports.
Infineon forecast growth in revenue of 3 percent in the current quarter, putting it on course to achieve top-line growth of 6.4 to 7.4 percent in the year to Sept. 30 - assuming an average euro exchange rate of $1.20.
It had earlier guided for revenue growth of 4 to 7 percent.
Infineon also saw a segment result margin - which reflects the performance of its operating units - of 17.5 percent for the full year, at the mid-point of its revenue guidance.
Shares in Infineon were down 1.5 percent to 22.31 euros at 1007 GMT. They rose earlier after it reported quarterly revenues of 1.941 billion euros (£1.727 billion), up by 6 percent from both the previous year and quarter and ahead of expectations of 1.925 billion euros in a Reuters poll of analysts.
Infineon’s adjusted earnings per share, at 0.24 euros, were just ahead of poll expectations of 0.23 cents.
Infineon said supply constraints had pushed up its book-to-bill ratio - the relationship of new orders to completed sales - to 1.5 times, validating its recent decision to build a new 300-mm wafer facility in Austria.
The 1.6 billion euro plant in Villach, which complements Infineon’s facility in Dresden, Germany, is expected to enter production in 2021.
“The book-to-bill ratio reached a remarkably high level,” analysts at DZ Bank said in a note. “Infineon appears to be winning market share in all segments.”
Editing by Maria Sheahan and Alexander Smith