“Third quarter net revenues grew 17.5% sequentially, above the mid-point of our guidance of 15.3%, driven by engaged customer programs and new products in, as expected, a soft legacy automotive and industrial market,” said Jean-Marc Chery, STMicroelectronics president and CEO. “Our third quarter operating margin was 13.1% and we returned to positive free cash flow while investing in key programs for our growth over the mid-term.
“ST’s fourth quarter outlook, at the mid-point, is for net revenues to grow sequentially about 5%, translating into year-over-year growth of about 1.2%; gross margin is expected to be about 38.2%, including about 120 basis points of unsaturation charges,” added Chery. “For the full year 2019, we expect net revenues at the mid-point to be about $9.48 billion, accompanied by a double-digit operating margin performance.”
Gross profit totaled $967 million, representing a year-over-year decrease of 3.6%. Gross margin of 37.9% decreased 190 basis points year-over-year, mainly impacted by price pressure and unsaturation charges. Operating income decreased 15.6% to $336 million, compared to $398 million in the year-ago quarter. The company’s operating margin decreased 270 basis points on a year-over-year basis to 13.1% of net revenues, compared to 15.8% in the 2018 third quarter. Free cash flow (non-US GAAP) was $170 million in the third quarter and $36 million for the year-to-date period.