STMicro Reports 2019 Third Quarter Revenue Up, Profits Down

October 24, 2019 by Paul Shepard

STMicroelectronics reported U.S. GAAP financial results for the third quarter ended September 28, 2019. ST reported third quarter net revenues of $2.55 billion, gross margin of 37.9%, operating margin of 13.1%, and net income of $302 million or $0.34 diluted earnings per share. Summary of financial results and projections:

  • Q3 net revenues $2.55 billion; gross margin 37.9%; operating margin 13.1%; net income $302 million
  • YTD net revenues $6.80 billion; gross margin 38.4%; operating margin 10.9%; net income $640 million
  • Business outlook at mid-point: Q4 net revenues up about 5.0% Q/Q and gross margin of about 38.2%

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

“Third quarter net revenues grew 17.5% sequentially, above the mid-point of our guidance of 15.3%, driven by engaged customer programs and new products in, as expected, a soft legacy automotive and industrial market.

“Our third quarter operating margin was 13.1% and we returned to positive free cash flow while investing in key programs for our growth over the mid-term.

“ST’s fourth quarter outlook, at the mid-point, is for net revenues to grow sequentially about 5.0%, translating into year-over-year growth of about 1.2%; gross margin is expected to be about 38.2%, including about 120 basis points of unsaturation charges.

“For the full year 2019, we expect net revenues at the mid-point to be about $9.48 billion, accompanied by a double-digit operating margin performance.”


Net revenues totaled $2.55 billion. On a sequential basis revenues increased 17.5%, 220 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, third quarter net revenues increased 1.2% as the Company recorded higher sales in Imaging, Analog, Power Discrete and MEMS largely offset by lower Digital ICs, Automotive and Microcontrollers sales. On a year-over-year basis, sales to OEMs increased 7.2%, while Distribution decreased 11.6%.

Gross profit totaled $967 million, representing a year-over-year decrease of 3.6%. Gross margin of 37.9% decreased 190 basis points year-over-year, mainly impacted by price pressure and unsaturation charges. Third quarter gross margin was 40 basis points higher than the mid-point of the Company’s guidance, mainly due to a lower level of unsaturation charges. Third quarter gross margin includes about 110 basis points of unsaturation charges.

Operating income decreased 15.6% to $336 million, compared to $398 million in the year-ago quarter. The Company’s operating margin decreased 270 basis points on a year-over-year basis to 13.1% of net revenues, compared to 15.8% in the 2018 third quarter.

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

Automotive and Discrete Group (ADG):

  • Revenue increased in Power Discrete and decreased in Automotive.
  • Operating profit decreased by 34.5% to $76 million. Operating margin was 8.5% compared to 12.8%.

Analog, MEMS and Sensors Group (AMS):

  • Revenue increased in Imaging, Analog and MEMS.
  • Operating profit increased by 26.1% to $198 million. Operating margin was 20.5% compared to 17.5%.

Microcontrollers and Digital ICs Group (MDG):

  • Revenue decreased in both Microcontrollers and Digital ICs.
  • Operating profit decreased by 9.2% to $108 million. Operating margin was 15.7% compared to 16.6%.