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 30, 2023. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported third quarter net revenues of $4.43 billion, gross margin of 47.6%, operating margin of 28.0%, and net income of $1.09 billion or $1.16 diluted earnings per share.
Jean-Marc Chery, ST President & CEO, commented:
“Q3 net revenues of $4.43 billion came in above the midpoint of our business outlook range, and Q3 gross margin of 47.6% was slightly above guidance.”
“Q3 net revenues increased 2.5% year-over-year. As expected, the revenue performance was driven mainly by continued growth in Automotive, partially offset by lower revenues in Personal Electronics.”
“On a year-over-year basis, gross margin remained stable at 47.6%, while, as expected, operating margin decreased to 28.0% from 29.4% and net income was stable at $1.09 billion.”
“First nine months net revenues increased 11.1% year-over-year, driven by growth in ADG and MDG Product Groups, partially offset by a decline of AMS Product Group. Operating margin was 27.6% and net income was $3.14 billion.”
“Our fourth quarter business outlook, at the mid-point, is for net revenues of $4.30 billion, declining year-over-year and sequentially by about 3%; gross margin is expected to be about 46%.”
“The midpoint of this outlook translates into full year 2023 revenues of about $17.3 billion, representing 7.3% year-over-year growth and a gross margin of about 48.1%.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q3 2023 | Q2 2023 | Q3 2022 | Q/Q | Y/Y |
| Net Revenues | $4,431 | $4,326 | $4,321 | 2.4% | 2.5% |
| Gross Profit | $2,109 | $2,119 | $2,059 | -0.5% | 2.4% |
| Gross Margin | 47.6% | 49.0% | 47.6% | -140 bps | – |
| Operating Income | $1,241 | $1,146 | $1,272 | 8.2% | -2.4% |
| Operating Margin | 28.0% | 26.5% | 29.4% | 150 bps | -140 bps |
| Net Income | $1,090 | $1,001 | $1,099 | 8.9% | -0.8% |
| Diluted Earnings Per Share | $1.16 | $1.06 | $1.16 | 9.4% | – |
Third Quarter 2023 Summary Review
| Net Revenues By Product Group (US$ m) |
| Q3 2023Q2 2023Q3 2022Q/QY/YAutomotive and Discrete Group (ADG)2,0251,9551,5633.6%29.6%Analog, MEMS and Sensors Group (AMS)9909401,3805.3%-28.3%Microcontrollers and Digital ICs Group (MDG)1,4121,4271,374-1.0%2.8%Others444–Total Net Revenues4,4314,3264,3212.4%2.5% |
Net revenues totaled $4.43 billion, representing a year-over-year increase of 2.5%. On a year-over-year basis, ADG and MDG revenues increased 29.6% and 2.8% respectively, while AMS decreased 28.3%. Year-over-year net sales to OEMs and Distribution increased 2.1% and 3.4%, respectively. On a sequential basis, net revenues increased 2.4%, 130 basis points better than the mid-point of ST’s guidance. ADG and AMS both reported an increase in net revenues on a sequential basis, and MDG slightly decreased, as expected.
Gross profit totaled $2.11 billion, representing a year-over-year increase of 2.4%. Gross margin of 47.6% was stable year-over-year, as improved product mix was offset by higher manufacturing costs and unused capacity charges.
Operating income decreased 2.4% to $1.24 billion, compared to $1.27 billion in the year-ago quarter. ST’s operating margin decreased 140 basis points on a year-over-year basis to 28.0% of net revenues, compared to 29.4% in the 2022 third quarter
Corporate developments
On September 19, 2023, the ST Supervisory Board announced that it would propose for shareholder approval at ST’s 2024 Annual General Meeting of Shareholders, the reappointment of Jean-Marc Chery for a three-year mandate as the sole member of the Company’s Managing Board and its President and Chief Executive Officer, and that Mr. Chery had accepted the proposal.
Business Outlook
ST’s guidance, at the mid-point, for the 2023 fourth quarter is:
- Net revenues are expected to be $4.30 billion, a decrease of about 3% sequentially, plus or minus 350 basis points.
- Gross margin of 46%, plus or minus 200 basis points.
- This outlook is based on an assumed effective currency exchange rate of approximately $1.08 = €1.00 for the 2023 fourth quarter and includes the impact of existing hedging contracts.
- The fourth quarter will close on December 31, 2023.
Conference Call and Webcast Information
ST will conduct a conference call with analysts, investors and reporters to discuss its third quarter 2023 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, https://investors.st.com, and will be available for replay until November 10, 2023.
