STMicroelectronics Reports Q4, FY 2019 Financial Results

STMicroelectronics reported US GAAP financial results for the fourth quarter ended Dec. 31, 2019. ST reported fourth-quarter net revenues of $2.75 billion, gross margin of 39.3%, operating margin of 16.7%, and net income of $392 million or $0.43 diluted earn-ings per share.

“We closed 2019 with a solid fourth-quarter sales and financial performance,” said Jean-Marc Chery, STMicroelectronics president and CEO. “Net revenues grew 7.9% sequentially, above the mid-point of our guidance of 5.0%, with all product groups contributing to the growth. Our gross margin was 39.3%, 110 basis points higher than the mid-point of our guidance, mainly due to better than expected manufacturing efficiencies and improved product mix. On a sequential basis, our operating margin was up 360 basis points to 16.7% and free cash flow increased to $461 million in the fourth quarter.

“Our 2019 financial performance, with net revenues of $9.56 billion and an operating margin of 12.6%, is aligned with the full-year expectations we provided in April 2019,” Chery added. “ST’s first-quarter outlook, at the mid-point, is for net revenues of $2.36 billion, increasing year-over-yearr by 13.7% and decreasing sequentially by 14.3%; gross margin is expected to be 38%, including about 80 basis points of unsaturation charges. For 2020, we plan to invest about $1.5 billion in CAPEX to support our strategic initiatives and revenue growth to progress towards our mid-term revenue ambition of $12 billion.”

Net revenues totaled $2.75 billion. On a sequential basis, revenues increased by 7.9%, 290 basis points better than the mid-point of the company’s guidance. On a year-over-year basis, fourth-quarter net revenues increased 4% as the company recorded higher sales in Analog, Microcontrollers, Imaging and MEMS partially offset by lower Automotive sales. On a year-over-year basis, sales to OEMs increased by 8.9%, while Distribution decreased by 6.9%.

Gross profit totaled $1.08 billion, representing a year-over-year increase of 2.0%. Gross margin of 39.3% decreased 70 basis points year-over-year, mainly impacted by price pressure and unsaturation charges. Fourth-quarter gross margin was 110 basis points higher than the mid-point of the company’s guidance, mainly due to better than expected manufacturing efficiencies and improved product mix. Fourth-quarter gross margin included about 100 basis points of unsaturation charges.

Operating income increased by 3.7% to $460 million, compared to $443 million in the year-ago quarter. The company’s operating margin decreased 10 basis points on a year-over-year basis to 16.7% of net revenues, compared to 16.8% in the 2018 fourth quarter.