STMicroelectronics Q2 Profit Plunges 64%, Stock Falls 15%

On July 25, STMicroelectronics (ST) released its financial results for the second quarter of 2024, revealing a notable drop in revenue and net profit. The company’s stock experienced a sharp decline of 15.35% following the announcement.

For Q2 2024, STMicroelectronics reported net revenues of $3.23 billion, marking a 25% decrease year-over-year. The gross margin was 40.1%, with an operating margin of 11.6% and net profit of $353 million, equating to a diluted earnings per share (EPS) of $0.38. This represents a dramatic 64% drop compared to the same quarter last year and a decline of over 30% from the previous quarter.

Jean-Marc Chery, President and CEO of STMicroelectronics, commented, “Q2 net revenues exceeded the midpoint of our projected business outlook due to increased sales in personal electronics, though this was partially offset by lower-than-expected automotive revenues. The gross margin met our expectations.”

For the first half of 2024, STMicroelectronics’ cumulative net revenues totaled $6.70 billion, a 21.9% decrease from the previous year. This decline was primarily due to reductions in the microcontrollers, power, and discrete devices segments. The gross margin stood at 40.9%, with an operating margin of 13.8% and net profit of $865 million.

Looking ahead to Q3 2024, Chery noted, “Contrary to previous expectations, orders from industrial customers have not improved, and automotive demand has decreased.”

STMicroelectronics has revised its full-year revenue forecast to between $13.2 billion and $13.7 billion, down from the previous range of $14 billion to $15 billion. The updated gross margin is projected to be around 40%, impacted by approximately 350 basis points of unused capacity costs. This marks the company’s second downward revision for the year, with an earlier forecast set at $16.9 billion in January.

In related developments, NXP Semiconductors reported Q2 revenue of $3.13 billion, meeting expectations. However, its automotive chip segment experienced a 7% year-over-year decline due to subdued demand, with modest growth anticipated.

Texas Instruments reported a 16% decrease in Q2 revenue, totaling $3.82 billion, attributing the decline to reduced demand in the industrial and automotive sectors. Despite this, Texas Instruments’ stock rose as the company projected third-quarter earnings in line with analyst expectations.