STMicroelectronics reports strong third-quarter results

Semiconductor company STMicroelectronics has reported its financial results for the third quarter and nine months ended 30 September 2017.

Third-quarter net revenues totalled $2.14 billion, with a gross margin of 39.5% and a net income of $236 million, or $0.26 per share. Third-quarter gross profit was $845 million and gross margin was 39.5%, 50 basis points above the mid-point of the company’s guidance. Gross margin increased substantially on a year-over-year basis, increasing 370 basis points due to improved manufacturing efficiency and better product mix as well as improved fab loading, partially offset by normal price pressure.

“In the third quarter we achieved a number of important milestones: quarterly revenues exceeded $2.1 billion, up almost 19% year over year; gross margin was 39.5%; and operating margin before impairment and restructuring was 13.7%,” said STMicroelectronics President and CEO Carlo Bozotti.

“All product groups recorded double-digit year-over-year revenue growth, driven by strong demand across all geographies in our focus application areas of Internet of Things, smartphones, industrial and smart driving.”

Meanwhile, net revenues in the first nine months of 2017 increased 15% to $5.88 billion from $5.11 billion in the first nine months of 2016, or 16.4% excluding businesses undergoing a phase-out (mobile legacy products and set-top box). Operating income improved significantly by $500 million to $585 million compared to the prior year period. Net income was $494 million, equivalent to $0.55 per share, compared to a net income of $53 million, or $0.06 per share, in the year-ago period.

“ST’s transformation, focused on sustainable revenue growth across our entire portfolio, is taking shape, driven by our technologies, products, people and diversified customer base,” said Bozotti. “We are determined to continue on this growth and innovation trajectory, underpinned by a solid financial position and enhanced liquidity.

“Based upon strong booking activity and the expected acceleration of growth of our new program serving wireless applications, we anticipate fourth-quarter revenues to increase sequentially by about 10% at the mid-point and the gross margin to improve to about 39.9% at the mid-point.

“Looking at the year in total, based upon our nine months results and fourth-quarter mid-point revenue guidance, we now expect that 2017 net revenues should grow year over year by about 18% accompanied by a substantial improvement in operating profitability and net income.”