STMicroelectronics announces 2016 financial results, 2017 projections

STMicroelectronics Pty Ltd

Monday, 30 January, 2017

Semiconductor company STMicroelectronics has reported positive financial results for the fourth quarter and full year ended 31 December 2016.

Fourth quarter net revenues totalled $1.86 billion, gross margin was 37.5% and net earnings were $112 million ($0.13 per share). Net revenues increased 3.5% sequentially to $1.86 billion — 30 basis points above the midpoint of the company’s guidance.

Net revenues for the full year increased 1.1% to $6.97 billion from $6.90 billion in 2015, while operating income increased substantially from $109 million to $214 million. Full year net income increased 58% to $165 million (equivalent to $0.19 per share), compared to net income of $104 million ($0.12 per share) for the full year 2015.

These increases were gratefully received by ST President and CEO Carlo Bozotti after what he described as “a weak start to the year”.

“Revenues grew 6.5% in the second half of 2016 compared to the same period one year earlier,” Bozotti said. “Importantly, by leveraging our strategic focus on Smart Driving and Internet of Things, we recorded year-over-year sales growth in the second half of 2016 across all of our product groups excluding discontinued businesses.

“Throughout 2016 we also further strengthened our technology and product portfolio, accelerating innovation and time to market to reinforce our leadership. Overall, we have improved our operating profitability through the combination of revenue growth, gross margin expansion and operating expense control.”

Bozotti expects the moment of the second half of 2016 to continue into 2017, based on “market forecasts, a positive booking trend and a strong point-of-sales performance at our distributors”.

“We expect our first quarter to reflect better than normal seasonality, with a sequential net revenues decline of about 2.4% at the midpoint,” he continued. “On a year-over-year basis, this would translate into a net revenues growth of about 12.5% at the midpoint. We expect a gross margin of about 37% at the midpoint.”

The company expects to invest approximately $1 billion in 2017, in order to fuel revenue growth from new specialised technologies and products. This will include an investment in 300 mm front-end manufacturing and in back-end assembly and test to support new products, said Bozotti.

“In particular, we anticipate a newly won program to ramp with substantial revenues in the second half of 2017,” he said.

The company expects first quarter revenues to decrease about 2.4% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the first quarter is expected to be about 37% plus or minus 2 percentage points.

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