Stmicroelectronics: The auto market weighs down STMicro’s semiconductor sales, before a rebound?

(BFM Bourse) – The semiconductor specialist has significantly revised downwards its turnover outlook following a first quarter below expectations due in particular to a more complicated automotive market.

The stars were aligned for a penalty for disappointment. STMicroelectronics rose 5.4% on Wednesday, driven by the encouraging outlook for its American peer Texas Instrument, considered a barometer of the entire semiconductor sector.

Such an increase on the eve of the publication of quarterly results does not really leave room for hiccups.

However, the copy made by STMicroelectronics this Thursday morning is far from immaculate. “STMicro has published its results for the first quarter of 2024, which are clearly below expectations,” underlines Oddo BHF.

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The car slows down

Over the first three months of the year, the Franco-Italian group saw its revenues fall by 19.1% from one quarter to the next, and by 18.4% over one year to $3.465 billion, missing quite clearly the consensus of 3.6 billion dollars cited by several research firms.

The gross margin, an indicator followed by the market, fell to 41.7%, compared to 49.7% a year earlier, while the operating margin increased from 28.3% to 15.9% over one year. . Earnings per share were more than halved to 54 cents.

“First quarter net sales and gross margin were both below the midpoint of our guidance range, driven by lower sales in the automotive and industrial sectors, partially offset by higher of turnover in personal electronics”, explained Jean-Marc Chery, the general director, in a press release.

“During the quarter, automotive semiconductor demand slowed relative to our expectations, entering a deceleration phase, while the correction in the ongoing industrial segment accelerated,” he said. -he adds.

Lowered prospects

The forecasts for the second quarter are also lower than expected. The group said it expects revenues of $3.2 billion at the midpoint, reflecting a decline of 7.6% quarter-on-quarter, while gross margin is expected at 40% with a range of plus or minus two percentage points.

However, according to Stifel, the consensus was at $3.7 billion for revenues and 42% for the target margin. This while Texas Instrument, for its part, indicated on Wednesday that it expected a sequential increase in its revenues of 4% in the second quarter, notes Stifel.

In addition, STMicro, following this first quarter which was less good than expected, lowered its turnover forecast for the whole of 2024, counting on an amount between 14 billion and 15 billion dollars. , compared to 15.9 billion to 16.9 billion previously. For the gross margin, the group is counting on a figure “at the low end” of a rate around 40%. Before this publication the consensus anticipated revenues of $16.3 billion and a gross margin of 43.6% according to Oddo BHF.

To everyone’s surprise, STMicro is not losing ground on the stock market. STMicro shares even gained 3%, signing the second largest increase in the CAC 40 around 11:30 a.m., after opening down more than 5%.

“Certainly it is a big warning on results. But somewhere it is the materialization of the fears that the market had, with the idea that the low point has been reached and that there can be a recovery in the second half of the year, with more clarity from management”, explains Stéphane Houri, analyst at Oddo BHF, to BFM Bourse.

“In the semiconductor sector there is a particular phenomenon. When a group recognizes that things are going badly, this allows investors to make better investment decisions and, possibly, position themselves for a recovery. It is true that this phenomenon is very marked this Thursday with STMicro”, he continues.

“Moreover, the company’s management was quite clear on the different dynamics of each segment during the call. In the automobile industry, there is a correction but not a collapse. And given the drop in turnover this year which could reach 18% in the middle of the range, the margin would remain good, with management citing a rate of around 41%. We could have expected worse and this shows that the group has worked well on its cost structure. ‘analyst.

Julien Marion – ©2024 BFM Bourse

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