Recombinant products sector to promote growth and driving intelligent business networking

Automotive products and first quarter revenue grew microcontroller, providing good support for the company's strategic focus.

China, April 29, 2016 - Across multiple electronic applications, the world's leading semiconductor supplier STMicroelectronics (STMicroelectronics, referred ST; NYSE: STM) announced the first 2 April 2016 ended first quarter earnings.

2016 first quarter net income of $ 1.61 billion, gross margin of 33.4%, net loss per share of $ 0.05. 

Chief Executive Officer Carlo Bozotti STMicroelectronics president, said: "Although the first quarter macroeconomic environment there are many uncertainties, complex market conditions, but the financial results STMicroelectronics in line with expectations, the performance was better than normal seasonal period . "
"Although first-quarter revenue reached 3.3% qoq, but we began to focus on an increase of the first quarter we achieved growth in automotive products and microcontrollers two businesses accounted for about 50% of the company's 2015 revenue: automotive business the growth was driven by automotive products to penetrate into all automotive systems, power microcontroller sales growth from the STM32 product family, these two operations are part of the core strategy of the company, our strategic focus is the development of intelligent driving and including industrial, household, city networking and consumer applications products. these results indicate that our strategic decision to bear fruit. "

Quarterly Financial Summary

 

 

 

 

 

 

 

 

 

 

 

 

(1) For information about how to convert into US GAAP, and the company believes these indicators to assess important reason, please refer to Annex A.

Product department statistics quarterly financial summary

Driving around the intelligent and strategic focus of two things, in the first quarter of 2016, business restructuring, in order to make better use of synergies between the products STMicroelectronics. Existing three product divisions: Automotive and Discrete Products Division ; analog and MEMS Products ; microcontrollers and digital IC Products . Products include MDG currently being reorganized set-top box business, is expected to save money each year after the reorganization of $ 170 million. To be consistent with 2016 earnings, we adjusted the number of all pre-billing.

 

(A) Net revenues include other imaging products, sales revenue subsystems and packaging services and other income. 

Recalling the first quarter
Needs of affected by seasonal factors, the first quarter of 2016, net income decreased by 3.3%, in line with expectations. Automotive and Discrete Products DivisionSTMicroelectronics largest product sector, sales chain increased 5.4%, the main growth driver in Europe demand for automotive products, strong growth, but unfavorable market environment and the demand by seasonal factors, the influence, discrete devices offset by growth performance automotive products. Analog and MEMS Products sales revenue was essentially flat with the previous quarter, while the micro-controller IC and Digital Products Division  were down 13.4%.

Look up from the first quarter, net income was down 5.4%, or 3.3%, without considering the negative impact of foreign exchange factors, and some companies will move legacy product, the camera module and set-top boxes and other phase-out impact of delisting, mainly due to the market demand is still weak. However, some products have to achieve revenue growth, revenue growth is not considering the foreign exchange factors adversely affected, automotive products and microcontrollers more than 4.0%.

From the first quarter of 2016, regional sales organization STMicroelectronics into three: EMEA (Europe, Middle East and Africa); the Americas; Asia-Pacific region. Asia Pacific is the original Greater China and South Asia with Japan and South Korea the original area consisting of two regional sales merger. EMEA region grew by 3.0%, while the Americas and Asia Pacific fell by 8.0% and 8.6%, respectively.

2016 first quarter gross profit $ 538 million, gross margin of 33.4%, the gross margin of idle capacity expenses down 60 basis points. Gross margin in the first quarter rose 20 basis points, thanks to the positive impact of exchange rates, net of hedging, to reduce manufacturing efficiency spare capacity and increased expenses, partially offset by price pressures but growth momentum. Manufacturing efficiency and price pressures resulting in gross profit margin fell 10 basis points, however, to reduce expenditure in spare capacity, optimize the product mix and the positive impact of currency hedging and joint action under the net, gross margin decline narrowed.
Research and development and sales management combined expenditure $ 571 million, while last year was $ 591 million, mainly due to the positive impact of exchange rates, net of hedging and savings plans in 2015 to complete. From the chain perspective, R & D and sales management combined expenditure decreased by $ 12 million, benefiting from the positive impact on exchange rates, hedging and net income in the first quarter less than the number of days in the fourth quarter.

Other income, net recorded in the first quarter of 2016 income of $ 28 million, mainly allocated to research and development funding.

Operating loss before restructuring charges, impairment of the first quarter (1) $ 5 million, accounting for 0.3% of total revenue; the same period last year profit of $ 10 million, accounting for 0.6% of total income; to reduce income and price pressures are leading to the main reason for the loss, but the positive impact of exchange rates, net of hedging, optimization of product mix and manufacturing efficiencies enable loss narrowed. MDG ADG and operating profit growth in both sectors, while AMG division revenue due to reduced profit margins decline.

2016 first-quarter restructuring charges of $ 28 million of impairment, restructuring plan set-top box business is the main reason for the occurrence of the first phase of spending.

2016 first-quarter net loss of $ 41 million, a loss of $ 0.05 per share, a year earlier loss of $ 22 million, last quarter net profit of $ 200 million.

2016 first quarter, the effective average exchange rate of approximately $ 1.10 pairs of 1.00 euros, the first quarter of 2015 was $ 1.23 pairs of 1.00 euros in the fourth quarter of 2015 was $ 1.11 pairs of 1.00 euros.

Cash Flow and Balance Sheet Highlights
2016 first quarter capital expenditures deducted from the $ 100 million after sales of securities, and the same period of the last quarter of last year were $ 89 million.

End of the quarter, inventories $ 1.3 billion, up 4% from the previous quarter. 2016 first quarter inventory turnover 3.3 times or 109 days.

The first quarter of 2016, cash dividends totaling $ 88 million. April 1, 2016, STMicroelectronics Supervisory Board proposed decision, to shareholders holding ordinary shares of $ 0.24 cents per share cash dividend, dividends specific method, in 2016 the second, third and fourth quarter and first quarter of 2017 during the month of each quarterly distribution to the register of shareholders of $ 0.06 per share in cash, distributed in four quarters, a total of $ 0.24 per share. The company will be held in Amsterdam, The Netherlands May 25, 2016 2016 Shareholders' Meeting.

As of April 2, 2016, the company net financial position * increased to $ 439 million; as of December 31, 2015, the company net financial position * increased to $ 494 million. As of April 2, 2016, STMicroelectronics financial resources totaled $ 2.04 billion, total debt of $ 1.6 billion. *

Later in the quarter, including non-controlling interest, total equity was $ 4.82 billion.

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(1) Non-GAAP metrics. For more information and conversion to US GAAP described in the annex.

2016 Second Quarter Business Outlook

Mr. Bozotti said: "After experiencing several quarters of weak market demand, we have noted signs of recovery in the semiconductor industry in the first quarter, the global regional market orders began to pick up, automobile and industrial orders increased in both markets was particularly evident. accordingly, we expect second-quarter net income growth of about 5.5%, gross margin of about 34.0%, the two goals are in the middle of our forecast range. "

The company expects second-quarter 2016 revenues were increased by about 5.5 percent, plus or minus 3.5 percentage points. 2016 second quarter gross margin of about 34.0%, plus or minus 2.0 percentage points, less than the operating rate of expenditure so that the gross margin by about 60 basis points.

The Prospects assume the second quarter of 2016 the dollar-euro exchange rate of approximately $ 1.12 = € 1.00, including the impact of the current hedging contracts. The second quarter closing date for July 2, 2016.