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By Harro Ten Wolde
FRANKFURT (Reuters) - German chipmaker Infineon reported better than expected first-quarter results on Thursday and raised its forecast for the year, boosted by the dollar's strength and improved demand for power management and security chips.
Infineon, which also makes chips that activate car airbags, control air conditioners and washing machines and operate mobile phones, now expects 2015 revenues to rise 10-14 percent to between 4.75 billion and 4.92 billion euros (4 billion pounds), with a core operating margin of 14-15 percent at the mid-point of the sales forecast.
The company's previous outlook was for revenues to rise 6-10 percent to 4.58-4.75 billion euros, with an operating margin of about 14 percent.
Analysts polled by Reuters on average were expecting 2015 revenues of 4.74 billion, with individual estimates ranging from 4.46 billion euros to 5.43 billion.
Infineon's shares were up 0.5 percent by 9:30 a.m., outperforming a 0.6 percent weaker STOXX Europe 600 technology sector index, after hitting a more than seven-year high.
However, the shares are valued at almost 17 times expected earnings, below the sector average of 23.5.
Infineon's operating profit in the last three months of 2014, its fiscal first quarter, rose 46 percent to 169 million euros, excluding special items, beating the most optimistic estimate of 143 million euros in the poll.
"Revenue and margin have developed better than expected ... in particular due to the strength of the dollar," Chief Executive Reinhard Ploss said, adding that the dollar's rise added about 2 percentage points to its operating margin.
Infineon, Europe's second-biggest chips firm behind STMicroelectronics, gets just under half its sales in dollars, while about 60 percent of its costs are in euros.
Chief Financial Officer Dominik Asam told analysts on a conference call that the raised forecast was "pretty much a full exchange tailwind effect".
In contrast STMicroelectronics, which has about 85 percent of its sales in dollars and close to 46 percent of its costs in euros, said on Wednesday it was likely to take a few quarters before the benefits of the weaker euro showed up in its results due to its currency hedges.
POWER MANAGEMENT
Infineon said it expected its business with power management chips and security semiconductors to grow faster than the rest of the group.
That chimed with upbeat remarks made last week by U.S. rival Fairchild, which said its orders had accelerated in January as its customers were ramping up inventories.
Infineon's raised forecast also does not factor in the $3 billion acquisition of International Rectifier, which was sealed earlier this month and will complement Infineon's own range of high-powered chips with the California-based company's low-power, energy efficient chips.
Infineon said it plans to report second-quarter results, including figures from International Rectifier, on May 5.