STMicroelectronics Reports Solid Fourth Quarter FY 2019 Financial Results

STMicroelectronics reported U.S. GAAP financial results for the fourth quarter ended December 31, 2019, including 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 earnings per share.

For the entire fiscal year, ST reported net revenues $9.56 billion; gross margin 38.7%; operating margin 12.6%; and net income $1,032 million.

Jean-Marc Chery, STMicroelectronics President & CEO, commented:

• “We closed 2019 with a solid fourth quarter sales and financial performance. 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.
• “ST’s first quarter outlook, at the mid-point, is for net revenues of $2.36 billion, increasing year-over-year by 13.7% and decreasing sequentially by 14.3%; gross margin is expected to be 38.0%, 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 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 4.0% 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 8.9%, while Distribution decreased 6.9%.

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

• Automotive and Discrete Group (ADG):
  • Revenue decreased in both Automotive and Power Discrete.
  • Operating profit decreased by 19.9% to $113 million. Operating margin was 12.2% compared to 14.6%.
• Analog, MEMS and Sensors Group (AMS):
  • Revenue increased in Analog, Imaging and MEMS.
  • Operating profit increased by 39.1% to $281 million. Operating margin was 25.9% compared to 20.5%.
• Microcontrollers and Digital ICs Group (MDG):
  • Revenue increased in Microcontrollers and was substantially flat in Digital ICs.
  • Operating profit decreased by 2.5% to $119 million. Operating margin was 16.0% compared to 17.7%.