Reduced Earnings by Infineon, Revised Forecasts Upsurge - Infineon's quarterly earnings drop by nearly a fourth, but anticipates more favorable future prospects
Infineon, the semiconductor giant based in Neubiberg near Munich, Germany, has reported solid financial results for the third quarter of its current fiscal year. The company's profit stood at 305 million euros, albeit a 24% decrease compared to the same period last year. However, compared to the previous quarter, Infineon managed to increase its profit by 73 million euros.
According to CEO Dr. Reinhard Ploss (Hanebeck), these figures represent "solid results in a very volatile environment." The company's revenues remained stable at 3.7 billion euros compared to the previous year.
Infineon's financial performance is partly attributed to its cost-saving program, known as the Step Up program. This initiative aims to deliver annual savings of nearly €1 billion by 2027. The company expects to achieve 50% of these savings in 2025, about two-thirds in 2026, and the full savings target by 2027.
CFO Jochen Haneck (Schneider) expects to achieve almost half of the cost-saving target in the current year, more than originally planned. The program includes the reduction of 1,400 jobs and the relocation of another 1,400 to countries with lower costs.
The Step Up program is a key driver in maintaining strong cost discipline and enabling Infineon's earnings resilience and margin improvement in 2025–2027. This cost discipline contributes to Infineon's financial performance, as seen in its Q3 FY 2025 results where revenue met guidance and the Segment Result was above forecast (€668 million with an 18.0% margin), indicating strong profitability despite external challenges such as tariff uncertainties and currency effects.
Infineon forecasts a full fiscal year 2025 revenue of around €14.6 billion with an adjusted gross margin of at least 40%, and a Segment Result Margin expected in the high teens percentage range, improved from previous mid-teens guidance. The cost-saving program supports these earnings by improving margins and free cash flow, which is now expected to organically total about €1.0 billion for FY 2025, up from an earlier estimate of around €0.9 billion. Adjusted Free Cash Flow (excluding major investments and M&A) is also expected to increase slightly to around €1.7 billion.
Infineon no longer assumes the worst-case scenario for tariffs, primarily due to indirect effects through its customers, including the struggling automotive industry. However, the indirect effects of trade conflicts are difficult to assess, according to Hanebeck. The weak US dollar, as the company's revenues are mainly denominated in this currency, also impacted Infineon's business.
Customer inventories have now reached a healthy level, according to Hanebeck. Despite the worsening outlook for the dollar, Infineon expects its margins to be slightly higher than previously forecast. Infineon has already reached agreements with all affected employees in Europe, as stated by Hanebeck.
The company continues to navigate in an economically and geopolitically uncertain environment. However, Infineon's cost-saving program and its focus on cost discipline are proving to be effective in maintaining strong earnings resilience and margin improvement, complementing growth initiatives such as the upcoming acquisition of Marvell’s automotive Ethernet business to strengthen product offerings.
- Infineon's cost-saving program, known as the Step Up program, aims to deliver annual savings of nearly €1 billion by 2027, with half of these savings expected to be achieved in the current year, partly contributing to the company's solid financial results and resilience in the volatile business environment.
- TheSegmente Result Margin for Infineon's full fiscal year 2025 is expected to be in the high teens percentage range, improved from previous mid-teens guidance, due to the company's cost-saving program that increases margins and free cash flow, with an organically totaled €1.0 billion expected for FY 2025.
