STMicroelectronics Reports 2Q, 1H 2016 Financial Results

STMicroelectronics reported financial results for the second quarter and first half ended July 2, 2016. Second quarter net revenues totaled $1.70 billion, gross margin was 33.9%, and net earnings were $0.03 per share.
 
“In the second quarter, we made another step towards our goal to return to year-over-year sales growth in the second half of 2016. Sequentially, revenues increased 5.6% and gross margin improved 50 basis points. We also made progress in our set-top box restructuring program and well managed our cash flow,” commented Carlo Bozotti, STMicroelectronics president and CEO.
 
“Sequential revenue growth came from the progress we are making on our areas of strategic focus, Smart Driving and Internet of Things,” added Bozotti. “Our automotive business enjoyed another strong quarter across all applications; our general purpose microcontroller business had another record billing performance, driven by STM32; our Time-of-Flight specialized image sensors entered multiple smartphone models and our power discretes started a broad-based recovery.”
 
Second quarter net revenues increased 5.6% sequentially, above the midpoint of the company’s guidance. Automotive and Discrete Group (ADG) revenues, representing the largest product group of ST, increased 7.5% on a sequential basis driven by a strong recovery in demand for power discrete products and continued and broad-based strength in automotive products.
 
Microcontrollers and Digital ICs Group (MDG) increased 4.6% on a sequential basis driven by general purpose microcontrollers and digital ASICs for networking applications. Analog and MEMS Group (AMG) revenues increased sequentially 1.8% driven by analog products partially offset by lower sales of MEMS products. Specialized image sensors, reported in Others, registered a strong sequential revenue growth.
 
On a year-over-year basis, second quarter net revenues decreased 3.2%, or 1.7% excluding businesses undergoing a phase-out (mobile legacy products, camera modules and set-top box). As anticipated, automotive, including ADAS solutions, and microcontrollers, led by general purpose, continued to be strong, growing revenues about 6% and 4%, respectively, compared to the year-ago quarter.
 
In the second quarter, specialized image sensors posted year-over-year growth. Power discretes, still impacted by weaker market conditions compared to the year-ago period, decreased as did digital reflecting the discontinued product lines. AMG revenues decreased 15.4% compared to the year-ago period mainly due to lower wireless and computer peripheral applications sales.
 
All regions grew revenues sequentially, led by the Americas up by 9.6%, Asia Pacific up by 5.1% and EMEA up by 4.6%. On a year-over-year basis, EMEA grew 4.6% while the Americas and Asia Pacific decreased by 3.6% and 6.7%, respectively.
 
Second quarter gross profit was $577 million. The gross margin was 33.9%, and included about 45 basis points of unused capacity charges. On a sequential basis, gross margin increased 50 basis points on manufacturing efficiencies and improved product mix partially offset principally by price pressure.
 
Combined R&D and SG&A expenses were $565 million, decreasing by $6 million on a sequential basis, benefiting from fewer calendar days and the initial benefits of the set-top box restructuring plan, partially offset by unfavorable currency effects, net of hedging, in the second quarter.