FILE PHOTO: Infineon headquarter is pictured before the annual results news conference in Munich, Germany, November 15, 2023. REUTERS/Michaela Rehle/File Photo
BERLIN (Reuters) -Infineon will cut 1,400 jobs and relocate 1,400 more, its CEO said on Monday, after third-quarter revenue missed expectations, prompting the German chipmaker to downgrade its full-year forecast for the third time in just a few months.
The firm, which has around 58,600 staff worldwide according to its website, narrowed its annual revenue guidance to around 15 billion euros ($16 billion), having already twice lowered it, most recently to 15.1 billion euros, plus or minus 400 million.
Revenue for the April-June quarter came in at 3.702 billion euros, short of the 3.8 billion forecast in a company-provided consensus and down 9% on the year. Net profit was 403 million euros, also missing the consensus forecast of 447 million.
"The recovery in our target markets is progressing only slowly. Prolonged weak economic momentum has resulted in inventory levels in many areas overlaying end demand," said Chief Executive Jochen Hanebeck.
As part of the previously announced "Step Up" cost savings programme, the company plans to cut 1,400 jobs worldwide and relocate a further 1,400 positions to countries with lower labour costs, Hanebeck said on a call after the results.
Infineon shares fell almost 6% in early trade, but by 0830 GMT had recovered to trade up 0.8%.
Jefferies analyst Janardan Menon said the so-called segment result - management's preferred measure of operating profitability - of 734 million euros exceeded his expectations, and that it was positive the company was forecasting growth in all business areas in the fourth quarter versus the third.
DZ Bank's Dirk Schlamp was also relieved there were no major negative surprises, amid weak results from rivals. STMicroelectronics cut its full-year revenue and margin guidance, while U.S. heavyweight Intel suspended its dividend and is slashing jobs to fund a turnaround plan.
Infineon kept its outlook for the segment result margin after it came in above expectations in the quarter at 19.8%.
"In a market environment that remains challenging, Infineon continues to hold up well," said Hanebeck.
The Step Up programme, announced in May, should start to have a positive impact on the segment - or adjusted - result in the company's 2025 fiscal year, he added.
Revenue in the automotive segment, a weak spot for the industry, rose slightly quarter on quarter to 2.11 billion euros, as stronger demand in "software-defined vehicles" helped micro-controllers business in particular, Infineon said.
($1 = 0.9153 euros)
(Reporting by Hakan Ersen and Miranda Murray, Editing by Kirsten Donovan and Mark Potter)
