STMicroelectronics, a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the third quarter ended September 29, 2018. ST reported third quarter net revenues of $2.52 billion, gross margin of 39.8%, operating margin of 15.8%, and net income of $369 million or $0.41 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, made the following comments:
- “ST had another quarter of solid performance, with sequential revenue growth of 11.2%, above our 10% midpoint outlook, and operating margin expansion to 15.8%.
- “Revenue increased 18.1% year-over-year driven by strong growth in Imaging, Power Discrete and Automotive products.
- “Operating income and net income were up sharply year-over-year and sequentially.
- “ST’s fourth quarter outlook is for revenues to grow sequentially about 5.7% at the midpoint, translating into year-over-year revenue growth above 8%; gross margin is expected to be about 39.8%.
- “Based on our fourth quarter guidance, we anticipate 2018 revenues to grow about 16% year-over-year, in line with our expectations shared in May at our Capital Markets Day. This level of revenue growth will also drive strong improvements in operating margin and net earnings.”
Third 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 increased 11.2% sequentially, 120 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, third quarter net revenues increased 18.1% with all product groups delivering revenue growth. Year-over-year sales to OEMs and Distribution were up 21.6% and 11.2%, respectively.
The Company’s guidance for the 2018 fourth quarter is:
- Net revenues are expected to increase about 5.7% sequentially, plus or minus 350 basis points;
- Gross margin of about 39.8%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.18 = €1.00 for the 2018 fourth quarter and includes the impact of existing hedging contracts.
- The fourth quarter will close on December 31, 2018.