S&P ups Infineon outlook to positive

S&P said it revised its outlook for Infineon Technologies AG to positive from stable. The agency also affirmed the BBB issuer and senior unsecured ratings, the Cypress' U.S. private placement notes, and the BB+ issue rating on Infineon's hybrids.

“Improved operating leverage and tight cost control support profitability improvement and solid FOCF at Infineon. Because of increasing scale and operating leverage over time–with revenue reaching €14.2 billion in fiscal 2022 from €6.5 billion in fiscal 2016–and improved product mix, the company has significantly improved its profitability profile in recent years. Infineon's FOCF has also strengthened over the same period, and we expect it will remain solid despite a temporary contraction over fiscals 2023 and 2024 as the company undertakes massive investments in additional capacity and new technologies,” S&P said in a press release.

The improved outlook means a one-notch upgrade is possible in the next 24 months if Infineon’s revenue climbs above market rates while keeping an adjusted EBITDA margin of 30%, resulting in an average FOCF in excess of €1 billion, the agency said.

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