STMicroelectronics Reports 2017 4Q, Full Year Financial Results

STMicroelectronics reported financial results for the fourth quarter and full year ended Dec. 31, 2017. Fourth quarter net revenues totaled $2.47 billion, gross margin was 40.6%, and net income was $308 million or $0.34 diluted earnings per share.
 
“ST delivered a strong finish to 2017. Fourth quarter net revenues were up 32.6% year-over-year with double-digit growth across all product groups, gross margin reached 40.6%, and operating margin was at 16.5%,” said Carlo Bozotti, STMicroelectronics president and CEO. “On a sequential basis, fourth quarter revenues grew significantly better than seasonal at 15.5% and were 200 basis points above the high-end of our guidance, mainly thanks to higher than expected revenues in Imaging products and Microcontrollers.
 
“Full year 2017 net revenues increased 19.7% on strong growth across all product groups and geographies; gross margin expanded 400 basis points, operating margin increased 880 basis points to 11.9% and net income improved by $637 million to $802 million. This successful year also marked the 30th anniversary of the formation of ST.”
 
Analog, MEMS and Sensors Group (AMS) revenues increased 37.4% led by the Imaging Product Division which registered, as expected, triple-digit sequential growth. Automotive and Discrete Group (ADG) revenues were up 5.9% and Microcontrollers and Digital ICs Group (MDG) revenues increased 5.6%.
 
Fourth quarter gross profit was $1.00 billion and gross margin was 40.6%. On a sequential basis, gross margin increased 110 basis points due to improved product mix and increased manufacturing efficiency.
 
Net revenues for the full year 2017 increased 19.7% to $8.35 billion from $6.97 billion in 2016. By product group, full year 2017 Analog, MEMS and Sensors Group (AMS) revenues were up 41.4%, on triple-digit growth in Imaging and strong growth in both Analog and MEMS. Microcontrollers and Digital ICs Group (MDG) revenues increased 15.8% compared to 2016 on strong growth in general purpose microcontrollers partially offset by lower revenues for products undergoing phase-out. Automotive and Discrete Group (ADG) revenues increased 8.8% for the full year of 2017 compared to the full year of 2016 on growth in both Automotive and Discrete.
 
Full year 2017 gross profit was $3.27 billion. Gross margin improved by 400 basis points to 39.2% from 35.2% in full year 2016. Specifically, the 2017 gross margin benefited from manufacturing efficiencies, better product mix, and improved fab loading partially offset by normal price pressure.
 
Operating income in 2017 improved by $779 million to $993 million compared to 2016. Full year 2017 operating income and operating margin before impairment and restructuring charges increased sharply to $1.04 billion, equivalent to 12.4% of net revenues, compared to $307 million, equivalent to 4.4% of net revenues in 2016. Full year 2017 net income was $802 million, or $0.89 fully diluted earnings per share, compared to net income of $165 million, or $0.19 fully diluted earnings per share for the full year 2016.
 
Reflecting the strong growth in revenues and improvement in operating profitability, net cash from operating activities was $587 million and $1.71 billion for the fourth quarter and full year 2017, respectively. Full year 2016 net cash from operating activities was $1.04 billion. Free cash flow was $145 million and $338 million during the fourth quarter and full year of 2017, respectively. Full year 2016 free cash flow was $316 million.