STMicroelectronics Reports Solid Fourth Quarter FY 2019 Financial Results

January 22, 2020 by Paul Shepard

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%.