“In the first quarter of 2019, revenues and gross margin performed as anticipated, amid softened market dynamics. We maintained a solid level of profitability, with operating margin above 10% and net income of $178 million,” Jean-Marc Chery, STMicroelectronics president and CEO, said.
“Looking at the second quarter, we plan to return to sequential revenue growth. Our second quarter outlook, at the mid-point, is for net revenues to increase about 2.4%; gross margin is expected to be about 38.5%,” he added. “For the full year 2019, we expect net revenues to be in the range of about $9.45 to $9.85 billion. We therefore plan for strong sequential growth in the second half of the year compared with the first half, across the Industrial, Automotive and Personal Electronics end markets.”
Net revenues totaled $2.08 billion, representing a year-over-year decrease of 6.7%. On a year-over-year basis, the Company recorded lower sales of Microcontrollers/Memories, Analog and Imaging, partially offset by growth in Power Discrete, Automotive, Digital and MEMS. Year-over-year sales to OEMs and Distribution decreased 2.4% and 13.9%, respectively. On a sequential basis, net revenues decreased 21.6%, 90 basis points lower than the mid-point of the company’s guidance. All product group revenues declined on a sequential basis.
Gross profit totaled $818 million, representing a year-over-year decrease of 7.9%. Gross margin of 39.4% decreased 50 basis points year-over-year, mainly impacted by sales price pressure including the currency effect on the top line partially offset by improved product mix and manufacturing efficiency. First quarter gross margin was 40 basis points higher than the mid-point of the Company’s guidance.
Operating income decreased 21.6% to $211 million, compared to $269 million in the year-ago quarter. The company’s operating margin decreased 190 basis points on a year-over-year basis to 10.2% of net revenues, compared to 12.1% in the 2018 first quarter.
After the cash outflow of $76 million for the acquisition of 55% of Norstel’s share capital, free cash flow (non-U.S. GAAP) was negative $67 million in the first quarter, compared to positive $95 million in the year-ago quarter.