STMicroelectronics: 2023 Net Profit $4.21B, Up 6.3% YoY

On January 26, STMicroelectronics, a leading semiconductor manufacturer, disclosed its financial results for the fourth quarter and full year of 2023.

In Q4 2023, STMicroelectronics reported net revenue of $4.28 billion, reflecting a 3.2% year-on-year decrease. The total gross profit amounted to $1.95 billion, marking a 7.3% year-on-year decline, with a gross profit margin of 45.5%. Operating profit was $1.02 billion, indicating a 20.5% decrease compared to the same period last year, resulting in an operating profit margin of 23.9%, down 520 basis points from Q4 2022. The net profit for the quarter was $1.08 billion.

STMicroelectronics attributed the lower gross margin of 45.5% in Q4 to a 50 basis point shortfall from the initial guidance median and a 200 basis point year-on-year decrease. The reasons cited included rising manufacturing costs, idle capacity expenses, and adverse effects from hedged exchange rates. However, the company highlighted that the dual positive impact of favorable selling prices and product mix partially offset the decline.

Analyzing the performance of various business segments:

Automotive and Discrete Group (ADG) witnessed a 21.5% year-on-year revenue increase, with an operating profit of $657 million, up by 39.7%. The operating profit margin for ADG was 31.9%, compared to 27.7% in the same period last year.

Analog, MEMS, and Sensors Group (AMS) experienced a 25.8% year-on-year revenue decline, resulting in an operating profit of $147 million, down by 57.4%. The operating profit margin for AMS was 14.8%, compared to 25.8% in the previous year.

Microcontrollers and Digital ICs Group (MDG) reported an 11.5% year-on-year revenue decline, with an operating profit of $342 million, down by 30.9%. The operating profit margin for MDG was 28.0%, compared to 35.8% in the same period last year.

Net sales income through OEM and distribution channels decreased by 0.4% and 9.2%, respectively. On a quarter-on-quarter basis, net revenue decreased by 3.4%, 40 basis points lower than the company's initial guidance median. While ADG's net revenue improved sequentially, AMS remained stable, and MDG experienced a decline.

STMicroelectronics mentioned that Q4 revenue and gross margin were slightly below the initial guidance median. Despite growth in personal electronic product revenue, it was offset by the slowdown in the automotive business. Additionally, customer order volumes reduced in Q4 compared to the third quarter. The company observed stable terminal demand in the automotive market, limited growth in the personal electronic product market, and further weakening of demand in the industrial market during the fourth quarter.

For the full year of 2023, STMicroelectronics achieved a net revenue of $17.29 billion, a year-on-year growth rate of 7.2%. The gross margin was 47.9%, and the operating profit margin was 26.7%, compared to 27.5% in 2022. The net profit for 2023 was $4.21 billion, reflecting a 6.3% year-on-year increase. The company invested $4.11 billion in net capital expenditures, resulting in a free cash flow of $1.77 billion.

Looking ahead to the first quarter of 2024, STMicroelectronics anticipates a net revenue of $3.6 billion, with year-on-year and quarter-on-quarter declines of 15.2% and 15.9%, respectively. The gross margin is expected to be approximately 42.3%, and net capital expenditures for 2024 are projected to be around $2.5 billion.

STMicroelectronics stated, "We will drive the development plan for the full year 2024 revenue in the range of $15.9 billion to $16.9 billion. According to this plan, the gross margin is expected to be in the forties in terms of percentage points."