Second quarter net revenues and gross margin were above the mid-point of the company’s outlook. ST reported second quarter net revenues of $2.27 billion, gross margin of 40.2%, operating margin of 12.7%, and net income of $261 million or $0.29 diluted earnings per share.
“ST had another quarter of double-digit, year-over-year revenue growth, with improved performance across key financial metrics. We are on track with the goal set at our Capital Markets Day to grow year-over-year 2018 revenues between about 14% to 17%,” said Jean-Marc Chery, STMicroelectronics president and CEO.
“Revenue increased 18% year-over-year on balanced growth across all product groups, regions and end markets, with an especially strong performance in Industrial,” he added. “Operating income and net income were up sharply year-over-year, increasing respectively about 60% and 73%. ST’s third quarter outlook is for revenues to grow sequentially about 10.0%, reflecting year-over-year growth of 16.8%, and gross margin to be about 40.0%. This is driven by continued healthy demand in our end markets and, as anticipated, by growth in smartphone applications.”
Gross profit totaled $911 million, representing a year-over-year increase of 23.6%. Gross margin was 40.2%, 20 basis points better than the mid-point of the company’s guidance, and increasing 190 basis points year-over-year, largely driven by improved manufacturing efficiency and reflecting a favorable mix shift toward higher value products.
Operating income was $289 million, compared to $181 million in the year-ago quarter, with all product groups growing double-digit and delivering improved profitability. The company’s operating margin increased 330 basis points to 12.7% of net revenues, compared to 9.4% in the 2017 second quarter.
ST’s net financial position (non-US GAAP) was $411 million at June 30, 2018 compared to $522 million at March 31, 2018 and reflected total financial resources of $2.13 billion and total financial debt of $1.72 billion.