Infineon Technologies Ag · XETR:IFX
Infineon Technologies — Q2 FY2016 Earnings Presentation
46 slides from Infineon Technologies's earnings presentation, May 25, 2016
Slide 1: Second Quarter FY 2016 Quarterly Update
Second Quarter FY 2016 Quarterly Update Infineon Technologies AG Investor Relations
Slide 2: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Growth Drivers 3 Results and Outlook Disclaimer: This presentation contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group. These statements are based on assumptions and projections resting
Slide 3: Leadership in system understanding will foster future growth and profitability
Leadership in system understanding will foster future growth and profitability Competitive advantages Average-cycle financial targets System leader in Revenue Growth: Automotive ~8% Segment Result Margin: #1 and technology leader in Power ~15% Investment-to-Sales: Leader in Security Solutions ~13% 2
Slide 4: Solid Investment Grade rating assigned by S&P's in connection with revised capital structure targets
Solid Investment Grade rating assigned by S&P’s in connection with revised capital structure targets Revised capital structure targets announced by Infineon in February 2016: a.) Gross Cash b.) Gross Debt › “€1bn plus 10% to 20% of revenue” › “less than 2.0x EBITDA” Financial flexibility based on a
Slide 5: Infineon takes advantage of favorable capital markets to optimize its debt profile
Infineon takes advantage of favorable capital markets to optimize its debt profile 1) 1 Refinancing of the EUR tranche March 2015: Infineon‘s first Eurobonds replace › Maturity profile significantly €800m bridge financing improved 2) 2 Refinancing of the USD tranche › Investor basis broadened April
Slide 6: Automotive and power are the two major pillars of Infineon's businesses
Automotive and power are the two major pillars of Infineon‘s businesses Q2 FY16 revenue: EUR 1,611m Revenue split by Segment Power represents ~60% of revenue [EUR m] 670 IPC ~16% 496 PMM ATV ~31% ~42% 265 180 CCS ~11% OOS + C&E ~0% ATV IPC PMM CCS Power Non-Power 2016-05-25 Copyright © Infineon Tech
Slide 7: Infineon holds top position in each of its core markets
Infineon holds top position in each of its core markets Automotive Power Smart Card ICs semiconductors semiconductors total market in 2014: total market in 2015: total market in 2014: $2.63bn $27.4bn $16.2bn Infineon NXP 14.2% 19.2% NXP 30.5% (incl. IRF) Infineon 10.4% Mitsubishi 7.0% Infineon 23.9%
Slide 8: Tight customer relationships are based on system know-how and app understanding
Tight customer relationships are based on system know-how and app understanding ATV IPC PMM CCS EMS partners Distribution partners 2016-05-25 Copyright © Infineon Technologies AG 2016. All rights reserved. 8
Slide 9: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Growth Drivers 3 Results and Outlook 2016-05-25 Copyright © Infineon Technologies AG 2016. All rights reserved. 9
Slide 10: Infineon benefits from industrial, auto and security, the by far fastest growing segments
Infineon benefits from industrial, auto and security, the by far fastest growing segments CAGR 2015 – 2020 by Semiconductor Industry Segment Industrial 8.4% $42bn* Automotive 5.8% $29bn* Chip Card ICs** 4.6% $3.1bn* Total Semi Market 2.5% $347bn* Consumer 1.8% $45bn* Data Processing 1.7% $108bn* Com
Slide 11: Infineon is system leader in automotive; making cars clean, safe and smart
Infineon is system leader in automotive; making cars clean, safe and smart #2 with market share gains in power and sensors: › #1 in power semiconductors* › #2 in sensors* › #3 in microcontrollers* (#1 in powertrain**) Most balanced portfolio with sensors, micro- Infineon is ideally controllers and p
Slide 12: Infineon biggest market share winner in Sensors driven by radar sensor chips
Infineon biggest market share winner in „Sensors“ driven by radar sensor chips Infineon’s position 2015 Infineon covers Sensors (#2) 11.9% the entire µC (#3) 8.6% control loop Power (#1) 25.2% 2015 automotive semiconductor market by product category ($27.4bn) › Infineon achieved biggest market share
Slide 13: Four megatrends are shaping the automotive market, significantly increasing the semi content per vehicle
Four megatrends are shaping the automotive market, significantly increasing the semi content per vehicle ADAS/Autonomous driving xEV/eMobility › From ADAS to semi-automated › Mandated CO2 reductions make and finally autonomous driving electrification of powertrain › Every world region is striving fo
Slide 14: Infineon is the market leader in radar
Infineon is the market leader in radar, > 15 million chips shipped already 2015 radar sensor market share* Vision Zero + Autonomous Driving NXP Innovations for driver, road and 21% Infineon 43% Next Generation pedestrian safety STM 36% Dual-Chip Radar Solution 600 GHz RF, Dual-Chip Radar AURIXTM 3rd
Slide 15: Semiconductor content itemized to automation levels
Semiconductor content itemized to automation levels Average ADAS semiconductor content per level of automation Level 2 Level 3 Level 4 10% $550 20% 5% 25% 8% $400 12% 35% 40% 45% 60% $100 40% Sensor Fusion Camera Radar Actuators Total BOM Lidar Sensor Fusion Sensor Fusion Camera Camera Radar Radar T
Slide 16: Semiconductor content of EV/HEV vehicles falls right into Infineon's core competence
Semiconductor content of EV/HEV vehicles falls right into Infineon's core competence Average semiconductor content Other $704 Other $710 µC 16% Power 4% 4% 27% Sensors µC 7% 76% $372 Power 11% Sensors Other $338 43% µC 13% 55% $338 Sensors Power 23% 21% Courtesy: BMW Internal Combustion Engine Add-o
Slide 17: EV/HEV: China shows strong momentum; Infineon is well positioned globally
EV/HEV: China shows strong momentum; Infineon is well positioned globally 1 Premium OEM Soul EV Kangoo A3 e-tron V60, 1 Mass Market Twingo Q5 A6 S60, XC90 Passat, Golf FCEV OEM Jetta Focus Ray EV Zoe ix35 E-Class S-Class e-Golf Optima/Sonata e-up Grandeur 1 Premium OEM LaCrosse, Regal, 2 Mass Market
Slide 18: ADAS, CO2 reduction and adoption of premium features drive Infineon growth
ADAS, CO2 reduction and adoption of premium features drive Infineon growth Drivers for semiconductor content per car Vehicle production CO2 reduction Advanced safety Comfort, premium Courtesy: BMW Courtesy: Audi › ~2% growth p.a. › Driven by legislation › Current: › Premium cars are crash avoidance
Slide 19: Infineon is #1 and technology leader in power semiconductors
Infineon is #1 and technology leader in power semiconductors #1 in the market* Broadest product and technology portfolio Infineon is ideally positioned to gain Addressing broadest range of applications further market share and earn 300mm thin-wafer manufacturing for power superior margins semiconduc
Slide 20: As system leader in power Infineon offers solutions to a wide spectrum of applications
As system leader in power Infineon offers solutions to a wide spectrum of applications Covering the entire power chain Generation Transmission Consumption Main IPC markets Main PMM power markets System competence for highest reliability and highest efficiency Controllers Drivers MOSFETs/IGBTs Module
Slide 21: Infineon continuously improved market share in power while competitors remained flat
Infineon continuously improved market share in power while competitors remained flat Development on Infineon’s market share and relative market share* in the total power semiconductor market 20% 19.2%** 3 2.74** 15% 11.9% 11.8% 12.3% 11.2% 9.7% 10.2% 10.7% 10% 9.4% 2 8.1% 8.4% 8.5% 1.65 1.69 Int. Re
Slide 22: IRF and LSPS lift Infineon to top-5 position in fast-growing IPM market for the first time
IRF and LSPS lift Infineon to top-5 position in fast-growing IPM market for the first time IGBT components* Discrete standard (discretes and modules) MOSFETs total market in 2014: $4.45bn therein: IPMs total market in 2014: $5.83bn total market in 2014: $1.26bn Infineon Infineon 26.5% Mitsubishi 46.
Slide 23: IPC: Increasing VSD penetration drives power semiconductors in major home appliances
IPC: Increasing VSD penetration drives power semiconductors in major home appliances Power semiconductors in home appliances [US$ m] CAGR(15-20) = 11.7% 1,196 2,080 2015 2020 › Biggest home appliances market VSD penetration development for IGBT modules is room air [units m] 2015 2020 CAGR conditioni
Slide 24: PMM: Infineon provides best-in-class power MOSFETs for Chinese charging infrastructure
PMM: Infineon provides best-in-class power MOSFETs for Chinese charging infrastructure › China to build nationwide charging station network to charge 5m electric vehicles expected by 2020: › > 12,000 charging stations* › > 4.5m charging points* CoolMOS™ P6/C7 › 10 kW .. 15 kW per module charging poi
Slide 25: Efficiency and digitalization are main market drivers for power applications
Efficiency and digitalization are main market drivers for power applications IPC PMM Drives Renewables Traction MHA AC-DC DC-DC › Energy › Legislation › Growing › Energy › Energy › Energy efficiency › Growing population in efficiency efficiency efficiency › Automation share of metropolitan › Growing
Slide 26: Infineon is the leader in security solutions for the connected world
Infineon is the leader in security solutions for the connected world #2 in microcontroller-based smart card ICs* Complete portfolio of hardware, software, services and turn-key solutions Infineon is ideally positioned to Infineon Security Partner Network (ISPN) benefit from the easy implementation
Slide 27: Most recent design-wins underline Infineon's #1 position in embedded digital security
Most recent design-wins underline Infineon‘s #1 position in embedded digital security Most recent design-wins for OPTIGA™ TPM › Notebooks – Lenovo ThinkPad – Microsoft Surface Book › Tablets – Microsoft Surface Pro 4 Courtesy: Lenovo Courtesy: Microsoft › Smart home hub Most recent design-wins for O
Slide 28: Infineon and partners demonstrate IoT security at RSA Conference 2016
Infineon and partners demonstrate IoT security at RSA Conference 2016 Infineon OPTIGA™ TPM becomes the center of IoT security Cisco Huawei › With Cisco, OPTIGA™ TPM supports › Huawei‘s IoT management platform protection against validates the integrity of devices by › rogue device attacks using the R
Slide 29: CCS is well positioned to grow faster than the market as leader in security solutions
CCS is well positioned to grow faster than the market as leader in security solutions Government High-end Mobile Payment IoT Security Identification Communications › Transition to chip- › Adoption of › Rise of smart › Greater adoption of based payment electronic homes, connected NFC technologies car
Slide 30: Infineon's long-term growth is based on sustainable growth drivers
Infineon‘s long-term growth is based on sustainable growth drivers ATV IPC PMM CCS Courtesy: BMW Group › CO2 reduction › Energy efficiency › Energy efficiency › Security as a › Advanced Driver › Automation › Power density function Assistance › Productivity › BLDC motors › Mobile payments Systems inc
Slide 31: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Growth Drivers 3 Results and Outlook 2016-05-25 Copyright © Infineon Technologies AG 2016. All rights reserved. 31
Slide 32: ATV, IPC and PMM driving year-on-year growth
ATV, IPC and PMM driving year-on-year growth Revenue and Segment Result* [EUR m] +9% 1,586 1,598 1,611 1,556 239 1,483 13% 15% 18% 14% 14% 198 245 286 220 228 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Revenue Segment Result Segment Result Margin * Including International Rectifier from 13 January 2015
Slide 33: Strong growth in ATV due to ADAS and electro-mobility
Strong growth in ATV due to ADAS and electro-mobility ATV*,** IPC*,** PMM*,** CCS** [EUR m] [EUR m] [EUR m] [EUR m] +12% +7% 670 598 621 613 614 517 535 510 496 +10% 464 -1% 269 271 249 265 241 16% 19% 21% 16% 15% 181 173 180 12% 13% 17% 13% 14% 182 172 7% 11% 14% 9% 10% 18% 20% 21% 20% 20% 72 79 10
Slide 34: Guidance for Q3 FY16 and total FY16
Guidance for Q3 FY16 and total FY16 Outlook Q3 FY16* Outlook FY16* (compared to Q2 FY16) (compared to FY15) Increase of 12% Increase of 2% Revenue +/- 2%-points +/- 2%-points (prev.: Increase of 13% +/- 2%-points**) At the mid-point of the revenue guidance: Segment At the mid-point of the Result rev
Slide 35: Part of your life. Part of tomorrow.
Part of your life. Part of tomorrow. infineon
Slide 36: Infineon's Revenue Development (excl. IRF) Outperformed Total Semi Market
Infineon‘s Revenue Development (excl. IRF) Outperformed Total Semi Market [EUR m] CAGR(99-15): ~9% 6000 CAGR(99-15): +5.4% 4500 126,895*** 3000 300,000 5,100 (excl. IRF) 1,200** 200,000 1500 296,383 100,000 1,681 2,045 1,821 1,995 2,289 2,366 2,701 2,906 2,916 2,128 3,103 3,780 3,774 3,815 4,303 0 1
Slide 37: SG&A still includes noticeable acquisition-related costs that are incrementally declining
SG&A still includes noticeable acquisition- related costs that are incrementaly declining S and G&A* R&D** [EUR m] 220 218 210 215 200 195 201 197 198 195 200 180 15% 180 160 14% 140 120 13% 100 80 12% 60 40 11% 20 0 10% Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 FY15 FY16 FY15 FY16 General & Administration Sell
Slide 38: Inventories started to decline correspondent to normal seasonal pattern
Inventories started to decline correspondent to normal seasonal pattern Working capital Inventories [EUR m] [EUR m] [days] 1,129 1,190 1,165 911 1,012 1,040 125 1000 1000 759 761 100 800 631 800 550 75 600 600 400 50 400 200 25 200 0 0 0 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 FY15 FY16 FY15 FY16 Inventories
Slide 39: Investments on target of ~13% of sales; D&A stable at ~13% of sales
Investments on target of ~13% of sales; D&A stable at ~13% of sales Investments* D&A [EUR m] 1000 30% 887 890 ~850 ~850 800 785 22.8% 760 668 22.2% 20% 600 15.5% 514 378 466 428 400 13.5% 13.1% 364 13.1% 13.1% 12.1% 11.9% 10% 11.0% 213 9.8% 163 9.1% 200 167 211 0 0% FY11 FY12 FY13 FY14 FY15 FY16e FY
Slide 40: Dividend of €0.20 has increased capital returns by €225m in February 2016
Dividend of €0.20 has increased capital returns by €225m in February 2016 Total gross capital returns history [EUR m] 1,278 308 › Increase of 109 dividend from 225 €0.18 to €0.20. 212 202 26 167 164 › Payout of 130 €225m on 129 129 202 225 19 Feb 2016. 173 20 62 38 35 FY11 FY12 FY13 FY14 FY15 FY16 c
Slide 41: Net cash decreased due to €225m dividend cash out
Net cash decreased due to €225m dividend cash out Liquidity development [EUR m] 1,793 1,790 1,793 220 1,776 204 1,656 1,832 1,842 2,013 1,994 1,803 -176 27 49 Q2 Q3 Q4 Q1 Q2 FY15 FY16 Gross Cash Debt Net Cash Net Debt › Free Cash Flow from continuing operations was €45m › Small decrease in debt due
Slide 42: RoCE expected to increase in FY16 vs FY15
RoCE expected to increase in FY16 vs FY15 RoCE* history WACC: low teens % 30% FY14: 20% 20% FY15: 13% 17% 10% 21% 24% 24% 18% 6% 9% 26% 12% 15% 0% Q1 FY14 Q2 Q3 Q4 Q1 FY15 Q2 Q3 Q4 Q1 FY16 Q2 Q3 Q4 Capital Employed* history [EUR m] 6000 5213 5176 5377 5411 5009 4000 2969 2194 2232 2327 2452 2000 0 Q
Slide 43: Notes
Notes Investments = 'Purchase of property, plant and equipment' + 'Purchase of intangible assets and other assets' incl. capitalization of R&D expenses Capital Employed = 'Total assets' – 'Cash and cash equivalents' Please note: All positions in ' ' refer to the – 'Financial investments' respective
Slide 44: Infineon is a long-standing member of Europe's leading sustainability indices
Infineon is a long-standing member of Europe's leading sustainability indices Infineon’s most recent achievements › Sep 2015: Infineon was listed in the STOXX® Global ESG Leaders Indices, which serves as an indicator of the quality of Infineon’s performance in the governance, › Jan 2016: Infineon is
Slide 45: Financial calendar
Financial calendar Date Location Event 01 Jun 2016 Zurich Berenberg TMT Conference 08 – 09 Jun 2016 Berlin Dt. Bank German, Suisse & Austrian Conference 15 – 16 Jun 2016 Paris Exane European CEO Conference 20 Jun 2016 London JPMorgan CEO Conference 02 Aug 2016* Q3 FY16 Results 01 Sep 2016 Frankfurt
Slide 46: Institutional Investor Relations contacts
Institutional Investor Relations contacts Dr. Jürgen Rebel Corporate Vice President +49 89 234-21626 Investor Relations juergen.rebel@infineon.com Joachim Binder Senior Director +49 89 234-25649 Investor Relations joachim.binder@infineon.com Holger Schmidt Manager +49 89 234-22332 Investor Relations
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