STMicroelectronics Reports Q2 2018 Financial Results

- Advertisement -
- Advertisement -

STMicroelectronics, a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the second quarter ended June 30, 2018. 

STMicroelectronics
Image for representational purpose only

Second quarter net revenues and gross margin were above the mid-point of the Company’s outlook.  ST reported second quarter net revenues of $2.27 billion, gross margin of 40.2%, operating margin of 12.7%, and net income of $261 million or $0.29 diluted earnings per share. Jean-Marc Chery, STMicroelectronics President & CEO, made the following comments:

  • ST had another quarter of double-digit, year-over-year revenue growth, with improved performance across key financial metrics. We are on track with the goal set at our Capital Markets Day to grow year-over-year 2018 revenues between about 14% to 17%.
  • “Revenue increased 18% year-over-year on balanced growth across all product groups, regions and end markets, with an especially strong performance in Industrial.
  • “Operating income and net income were up sharply year-over-year, increasing respectively about 60% and 73%.
  • ST’s third quarter outlook is for revenues to grow sequentially about 10.0%, reflecting year-over-year growth of 16.8%, and gross margin to be about 40.0%. This is driven by continued healthy demand in our end markets and, as anticipated, by growth in smartphone applications.”

Financial Summary (U.S. GAAP)(1)

- Advertisement -
($ in millions except earnings per share) Q2 2018 Q1 2018 Q2 2017 Y/Y Q/Q
Net Revenues $2,269 $2,226 $1,923 18.0% 1.9%
Gross Margin 40.2% 39.9% 38.3% 190 bps 30 bps
Operating Income $289 $269 $181 59.7% 7.4%
Operating Margin 12.7% 12.1% 9.4% 330 bps 60 bps
Net Income $261 $239 $151 72.8% 9.2%
Diluted Earnings Per Share $0.29 $0.26 $0.17 70.6% 11.5%

 (1) Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.

Second Quarter 2018 Summary Review

Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors Group (AMS). Prior periods have been restated accordingly.

Net Revenues By Product Group

(in US$ millions)

Q2 2018 Q1 2018 Q2 2017 Y/Y Q/Q
Automotive and Discrete Group (ADG) $870 $817 $755 15.2% 6.5%
Analog, MEMS and Sensors Group (AMS) 613 655 553 10.7 (6.4)
Microcontrollers and Digital ICs Group (MDG) 782 750 612 27.8 4.3
Others 4 4 3 24.1 5.9
Total Net Revenues $2,269 $2,226 $1,923 18.0% 1.9%


Net revenues
 increased 1.9% sequentially, 40 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, second quarter net revenues increased 18.0% with all product groups delivering double-digit revenue growth. Year-over-year sales to OEMs and Distribution were up 9.8% and 33.4%, respectively.

Gross profit totaled $911 million, representing a year-over-year increase of 23.6%. Gross margin was 40.2%, 20 basis points better than the mid-point of the Company’s guidance, and increasing 190 basis points year-over-year, largely driven by improved manufacturing efficiency and reflecting a favorable mix shift toward higher value products.

Operating income was $289 million, compared to $181 million in the year-ago quarter, with all product groups growing double-digit and delivering improved profitability. The Company’s operating margin increased 330 basis points to 12.7% of net revenues, compared to 9.4% in the 2017 second quarter.

By product group, compared with the year-ago quarter: 

Automotive and Discrete Group (ADG)

  • Revenue grew double-digits, in both Automotive and Power Discrete.
  • Operating profit increased by 28.8% to $84 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 9.7% from 8.7%.

Analog, MEMS and Sensors Group (AMS):

  • Revenue grew double-digits, in both Imaging and in Analog.
  • Operating profit increased by 24.1% to $64 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 10.5% from 9.4%.

Microcontrollers and Digital ICs Group (MDG):

  • Revenue grew double-digits, in both Microcontrollers and Digital ICs.
  • Operating profit increased by 121.6% to $159 million mainly due to higher revenue and associated gross profit. Operating margin increased to 20.3% from 11.7%.

Net income and diluted earnings per share increased to $261 million and $0.29, respectively, compared to $151 million and $0.17, respectively, in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

 

 

 

 

Trailing 12 Months

US$ in millions

Q2 2018

Q1 2018

Q2 2017

Q2 2018

Q2 2017

TTM Change

Net cash from operating activities

$360

$455

$369

$1,865

$1,368

36.3%

Free cash flow (non-U.S. GAAP)

$(40)

$95

$52

 

Capital expenditure payments, net of proceeds from sales, in the second quarter were $390 million, in line with the Company’s CAPEX guidance of $1.2-$1.3 billion for the 2018 full year. In the year-ago quarter, capital expenditures were $307 million.

Inventory at the end of the quarter was $1.56 billion, up from $1.43 billion in the prior quarter, to support demand expected in the third quarter. Day sales of inventory at quarter-end was 103 days, up from 97 days in the prior quarter.

As a result, free cash flow (non-U.S. GAAP) was negative $40 million and positive $56 million in the year-to-date period.

In the second quarter of 2018, the Company paid cash dividends totaling $54 million. A cash dividend of $0.24 per common share payable in equal quarterly installments of $0.06 in each of the second, third and fourth quarters of 2018 and first quarter of 2019 was approved on May 31st at the 2018 Annual General Meeting of Shareholders. ST’s net financial position (non-U.S. GAAP) was $411 million at June 30, 2018 compared to $522 million at March 31, 2018 and reflected total financial resources of $2.13 billion and total financial debt of $1.72 billion.

Business Outlook

The Company expects third quarter 2018 revenues to increase about 10.0% Q/Q (16.8% Y/Y) at the mid-point of the Company’s guidance, driven by continued healthy demand in the Automotive and Industrial end markets and, as anticipated, by growth in smartphone applications.

The Company’s guidance for the 2018 third quarter is: 

  • Net revenue is expected to increase about 10.0% sequentially, plus or minus 350 basis points;
  • Gross margin of about 40.0%, plus or minus 200 basis points;
  • This outlook is based on an assumed effective currency exchange rate of approximately $1.19 = €1.00 for the 2018 third quarter and includes the impact of existing hedging contracts.
  • The third quarter will close on September 29, 2018.
- Advertisement -

Related Artcles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Exclusive

XR Headset Quest 3, Meta

Global XR Headset Shipments See A Major Decline, Sony Rises

0
Sony grabbed a market share of 24% in 2023 up from 1% in 2022. Bulky form factor, and lag, hinder adoption by serious...

Indian PC Market Grows 4% In Q4 2023, Local Manufacturing Efforts Ramp Up

0
IT procurement by enterprises and SMBs, delayed in the first half of 2023, is starting to take place and is expected to accelerate...

“Efficiency In Solar Energy Is More About Investment Rationale Than Resource Limitation”

0
Indian utility-scale solar company SolarArise claims to offer investors long-term, cash-generating assets and anticipates advancements in energy storage technologies to enable 24-hour clean power...

Buzz

Tenstorrent- RISC V cores

MosChip Collaborates With Tenstorrent For Advanced RISC-V Cores

0
Tenstorrent has selected Moschip due to their tape out expertise in design services. India’s MosChip Technologies has announced partnership with computing company Tenstorrent and to...

BYD Aims For 20% Increase In Yearly EV Sales

0
The company is targeting sales of 500,000 vehicles internationally this year, over twice the amount sold last year, and aims to increase that figure...

RRP Electronics To Invest ₹5000 Cr In OSAT and R&D In Maharashtra

0
Cricket legend Sachin Tendulkar is investing in this semiconductor facility. Such celebrated personalities investing in the sector could be a great asset to the...

Important Sectors

BYD Aims For 20% Increase In Yearly EV Sales

0
The company is targeting sales of 500,000 vehicles internationally this year, over twice the amount sold last year, and aims to increase that figure...

RRP Electronics To Invest ₹5000 Cr In OSAT and R&D In Maharashtra

0
Cricket legend Sachin Tendulkar is investing in this semiconductor facility. Such celebrated personalities investing in the sector could be a great asset to the...

Subsidy Cuts Push E2W Makers Towards Budget Models

0
Electric two-wheeler manufacturers face reduced government subsidies and growing competition from established petrol vehicle brands in the upcoming fiscal year. These challenges compel them...

Nissan To Invest In Renault’s Ampere For EV Roadmap

0
The alliance aims to introduce both five-seater and seven-seater models for each brand in India. Japan's Nissan Motor has committed to investing in Renault's electric...

TPEM And HPCL Team Up To Enhance EV Charging Infrastructure

0
The collaboration seeks to enhance the experience of electric vehicle owners in India and promote greater adoption of electric vehicles among the population. Tata Passenger...

Manufacturing

JLR To Hire 250 Electrical Technicians For Future EVs

0
These new roles, part of a £15 billion investment, are in addition to 300 positions created last year by the British car maker. Jaguar Land...

Altmin India Partners With WMG To Advance Battery Tech

0
Altmin and WMG will collaborate to strengthen their global battery materials supply chain position by optimizing cathode materials and developing diverse cell designs across...

EVs To Cost Less Than Gas Vehicles by 2027, Says Gartner

0
Gartner predicts a faster decline in production costs compared to battery costs, which represent the most significant expense in an electric vehicle, accounting for...
MG

MG Motor To Set Up Battery Assembly Unit At Halol Facility

0
The company plans to investigate battery cell production in collaboration with external partners. Automaker MG Motor India is actively exploring the possibility of assembling and...

Servotech Boosts India’s EV Charging Infrastructure With Manufacturing Facility

0
The new facility is poised to start with an annual production capacity of 24,000 power modules and plan to scale up to 2.4 lakh...