STMicroelectronics Reports 2Q 2019 Financial Results

STMicroelectronics reported US GAAP financial results for the second quarter ended June 29, 2019. ST reported second quarter net revenues of $2.17 billion, gross margin of 38.2%, operating margin of 9.0%, and net income of $160 million or $0.18 diluted earnings per share.
 
“As planned, in the second quarter we returned to sequential revenue growth,” Jean-Marc Chery, STMicroelectronics president and CEO, said. “In fact, revenues increased 4.7%, above the mid-point of our guidance of 2.4%, driven by specialized imaging sensors, RF products for front end modules, silicon carbide MOSFETs and digital automotive, partially offset by general purpose analog, microcontrollers and legacy automotive products. We delivered an operating margin of 9.0%.
 
“During the first half of 2019 we delivered sales and profitability results in line with our quarterly guidance and we continued to advance our strategic investments,” added Chery. “Looking at the third quarter, we expect strong sequential revenue growth of about 15.3% at the mid-point. This growth will be driven by engaged customer programs and new products in a softer than expected legacy automotive and industrial market. Gross margin is expected to be about 37.5% at the mid-point, including about 140 basis points of unsaturation charges. For the full year 2019, we now expect net revenues to be in the range of about $9.35 to $9.65 billion. We confirm our investment plan of $1.1 to $1.2 billion.”
 
Net revenues totaled $2.17 billion. On a sequential basis revenues increased 4.7%, 230 basis points better than the mid-point of the company’s guidance. On a year-over-year basis, second quarter net revenues decreased 4.2% as the company recorded lower sales in Analog, Microcontrollers and Digital ICs, partially offset by growth in Automotive and Power Discrete, MEMS and Sensors. 
 
Gross profit totaled $830 million, representing a year-over-year decrease of 8.9%. Gross margin of 38.2% decreased 200 basis points year-over-year, mainly impacted by usual sales price pressure, unfavorable product mix and unsaturation charges. 
 
Operating income decreased 32.0% to $196 million, compared to $289 million in the year-ago quarter. The company’s operating margin decreased 370 basis points on a year-over-year basis to 9.0% of net revenues, compared to 12.7% in the 2018 second quarter.
 
Free cash flow (non-US GAAP) was negative $67 million in the second quarter, compared to negative $40 million in the year-ago quarter. ST’s net financial position (non-US GAAP) was $308 million at June 29, 2019 compared to $510 million at March 30, 2019 and reflected total liquidity of $2.51 billion and total financial debt of $2.20 billion.