Infineon Technologies Lowers Sales Forecast for FY2025

Infineon Technologies (OTC:IFNNY) (ETR:IFXGn) has revised its sales forecast for fiscal year 2025, citing anticipated weakness in the automotive sector as the main factor influencing this outlook.

Analysts from Morgan Stanley (NYSE:MS) highlighted that the updated guidance indicates a projected decline of 2% in annual sales, a shift from earlier market expectations that anticipated mid-single-digit growth.

The company's gross margin is also expected to decrease, projected at approximately 40%, down from 42.6% in FY24. Segment margins are expected to fall into the mid-to-high teens, which is below the consensus estimates of 42.8% and 20.5%, respectively.

The guidance update suggests that Infineon anticipates revenue of €3.2 billion for the December quarter, marking an 18.4% drop quarter-over-quarter, below both seasonal trends and the market consensus of €3.76 billion.

Specific segment forecasts indicate declines in both the Automotive and Connected Secure Systems divisions, with the Power & Sensor Systems division experiencing a more moderate downturn. Conversely, the Green Industrial Power division is expected to see a more significant decline.

Morgan Stanley analysts interpret this guidance as an indication that Infineon anticipates a weaker finish to calendar year 2024 in the automotive sector, though some recovery is expected in the latter half of FY25.

Furthermore, Infineon’s latest forecast includes an adjusted EBIT margin for the December quarter at roughly 15%, translating to an estimated adjusted EBIT of €480 million, about 33% below market expectations.

By the end of FY25, the company projects an adjusted EBIT of approximately €2.56 billion, around 21% below current market estimates.

Lastly, investment projections have been adjusted, with Infineon cutting FY25 capital expenditures to about €2.5 billion and estimating free cash flow of approximately €900 million.