STMicroelectronics reported third quarter net revenues of $2.55 billion, gross margin of 37.9%, operating margin of 13.1%, and net income of $302 million or $0.34 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
- “Third quarter net revenues grew 17.5% sequentially, above the mid-point of our guidance of 15.3%, driven by engaged customer programs and new products in, as expected, a soft legacy automotive and industrial market.
- “Our third quarter operating margin was 13.1% and we returned to positive free cash flow while investing in key programs for our growth over the mid-term.
- “ST’s fourth quarter outlook, at the mid-point, is for net revenues to grow sequentially about 5.0%, translating into year-over-year growth of about 1.2%; gross margin is expected to be about 38.2%, including about 120 basis points of unsaturation charges.
- “For the full year 2019, we expect net revenues at the mid-point to be about $9.48 billion, accompanied by a double-digit operating margin performance.”
Net revenues totaled $2.55 billion. On a sequential basis revenues increased 17.5%, 220 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, third quarter net revenues increased 1.2% as the Company recorded higher sales in Imaging, Analog, Power Discrete and MEMS largely offset by lower Digital ICs, Automotive and Microcontrollers sales. On a year-over-year basis, sales to OEMs increased 7.2%, while Distribution decreased 11.6%.
Gross profit totaled $967 million, representing a year-over-year decrease of 3.6%. Gross margin of 37.9% decreased 190 basis points year-over-year, mainly impacted by price pressure and unsaturation charges. Third quarter gross margin was 40 basis points higher than the mid-point of the Company’s guidance, mainly due to a lower level of unsaturation charges. Third quarter gross margin includes about 110 basis points of unsaturation charges.
Operating income decreased 15.6% to $336 million, compared to $398 million in the year-ago quarter. The Company’s operating margin decreased 270 basis points on a year-over-year basis to 13.1% of net revenues, compared to 15.8% in the 2018 third quarter.
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