“ST delivered a solid performance in the fourth quarter, with net revenues and operating income increasing sequentially 5.0% and 11.5%, respectively,” Jean-Marc Chery, STMicroelectronics president and CEO, said. “Net revenues in 2018 increased by 15.8% year-over-year led by Imaging, Automotive and Power Discrete.
“2018 has been an important year for ST. In line with the objectives we had set, we achieved significant revenue growth across our product groups, as well as a strong expansion of profitability and cash flow from operations,” added Chery. “Our first quarter outlook is for revenues of about $2.1 billion at the mid-point, decreasing year-over-year by about 5.7%. Sequentially, this represents a decrease of about 20.7%, reflecting the combined impact of increased unfavorable dynamics in some of the end markets we serve, on top of normal first quarter seasonality. From a profitability perspective, we expect a gross margin of about 39% at the mid-point.
Net revenues increased 5% sequentially, 70 basis points lower than the mid-point of the company's guidance. The revenue growth in Imaging, Automotive and Power Discrete was partially offset by Microcontrollers. On a year-over-year basis, fourth quarter net revenues increased 7.4% on double-digit growth across ADG, in Imaging and in Digital. Year-over-year sales to OEMs and Distribution were up 8.9% and 4.1%, respectively.
Gross profit totaled $1.06 billion, representing a year-over-year increase of 5.6%. Gross margin was 40%, 20 basis points higher than the mid-point of the company’s guidance.
Operating income increased 7.9% to $443 million, compared to $411 million in the year-ago quarter, led by ADG’s improved profitability.
Free cash flow (non-US GAAP) was $363 million in the fourth quarter, up 150.3% from the year-ago quarter and $533 million for 2018, up 73.1% from 2017.