Power Components

STMicro Reports 2017 Q4 Revenue of $2.47 Billion, Up 15.5%

STMicroelectronics reported financial results for the fourth quarter and full year ended December 31, 2017 including Q4 net revenues of $2.47 billion, up 15.5% sequentially and gross margin of 40.6%, both above the mid-point of ST's guidance.

Fourth quarter net income was $308 million or $0.34 diluted earnings per share and Q4 operating income was $408 million and operating margin was 16.5%. 2017 net revenues of $8.35 billion, up 19.7% year-over-year on broad-based growth and 2017 net income of $802 million, free cash flow(1) of $338 million.

"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%," commented Carlo Bozotti, STMicroelectronics President & 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. We celebrate this milestone with a solid product leadership in Internet of Things, Smartphones, Industrial and Smart Driving applications, a strong market position with major customers and in Distribution, a world-class team of engaged employees, a sustainable financial performance and an industry-leading return on invested capital," Bozotti continued.

Fourth quarter net revenues increased 15.5% sequentially, a better than seasonal performance, and 200 basis points above the high-end of the Company's guidance range mainly due to higher than expected revenues in Imaging products and Microcontrollers. On a sequential basis, 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%.

On a year-over-year basis, fourth quarter net revenues increased by 32.6% on double-digit growth across all product groups with strong traction of new products. Analog, MEMS and Sensors Group (AMS) fourth quarter revenues grew 70.1% year-over-year due to triple-digit growth in Imaging, a sharp recovery in Analog and solid growth in MEMS.

Microcontrollers and Digital ICs Group (MDG) fourth quarter revenues grew 21.4% year-over-year on very strong growth for general purpose microcontrollers, in part offset by lower sales of businesses undergoing phase-out. Automotive and Discrete Group (ADG) fourth quarter revenues increased 14.6% compared to the year-ago quarter on strong results for both Automotive and Power Discrete.

By region of shipment, revenues grew on a sequential basis across all regions. Specifically, Asia Pacific revenues grew by 24.5%, EMEA increased by 2.2% and the Americas was up by 0.4%. On a year-over-year basis, Asia Pacific revenues were up by 43.1%, EMEA increased by 21.5% and the Americas grew by 8.0%.

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, partially offset mainly by normal price pressure and negative currency effects, net of hedging.

Gross margin increased 310 basis points year-over-year largely driven by improved manufacturing efficiency and better product mix partially offset mainly by normal price pressure as well as negative currency effects, net of hedging.

Combined R&D and SG&A expenses were $592 million compared to $558 million and $570 million in the prior and year-ago quarter, respectively, increasing mainly due to seasonality and inflationary dynamics.

Fourth quarter other income and expenses, net, registered income of $18 million compared to $5 million in the prior quarter due to higher than anticipated R&D funding.

Impairment and restructuring charges in the fourth quarter were $20 million compared to $14 million and $24 million in the prior and year-ago quarter, respectively, mainly related to the set-top box restructuring plan announced in January 2016.

Operating income in the fourth quarter rose sharply on a sequential and year-over-year basis to $408 million compared to $278 million and $129 million in the prior quarter and year-ago quarter, respectively.

By product group, MDG operating margin increased to 19.6% from 17.9% in the prior quarter. ADG operating margin improved to 12.3% compared to 10.9% in the prior quarter. AMS operating margin expanded to 20.9% from 13.2% in the prior quarter, benefiting from an improved product mix, as well as leveraging higher revenues and improved manufacturing performance.

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.

STMicroelectronics NV
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