STMicroelectronics Q1 Net Profit Plunges Nearly 90%!
On April 24, STMicroelectronics ("ST") announced its financial results for the first quarter of 2025, revealing a significant decline in both revenue and net income due to weaker-than-expected demand in the automotive and industrial sectors. Under GAAP standards, STMicroelectronics reported net revenues of approximately $2.52 billion, representing a year-over-year decrease of 27.3% and a sequential decline of 24.2%. The company's gross margin came in at 33.4%, down 8.3 percentage points year-over-year and 4.3 points sequentially. Net income plummeted to $56 million, marking a sharp 89.1% drop compared to the same period last year and an 83.6% decline from the previous quarter. Diluted earnings per share stood at $0.06, reflecting an 88.9% year-over-year and 83.8% quarter-over-quarter decrease.
Jean-Marc Chery, President and CEO of STMicroelectronics, commented that first-quarter net revenues were aligned with the mid-point of the company's business outlook range. He noted that while personal electronics revenue grew, automotive and industrial revenue fell short of expectations. Due to product mix factors, the gross margin was slightly below the mid-point of the company's outlook range.
Despite the challenging environment, there was a positive development as the book-to-bill ratio improved during the first quarter, with automotive and industrial sectors recording a book-to-bill ratio above the average.
Performance across key product segments showed notable declines. The Analog, Power, MEMS, and Sensors (APMS) segment experienced significant drops in both revenue and profitability. Within this group, the Analog, MEMS, and Sensors (AMS) sub-segment saw revenues decrease by 23.9% year-over-year, mainly due to weaker analog product sales, while operating income fell by 66.7% to $82 million, with an operating margin of 7.7%, compared to 17.5% a year earlier. The Power and Discrete (P&D) sub-segment revenue declined by 37.1% year-over-year, with operating income shifting from a positive $77 million to a loss of $28 million, and the operating margin falling from 12.1% to -6.9%.
The Microcontrollers, Digital ICs, and RF products (MDRF) segment also reported steep declines. Embedded Processing (EMP) sub-segment revenue dropped by 29.1% year-over-year, primarily due to lower revenues from general-purpose microcontrollers and automotive microcontrollers. Operating income fell by 71.5% to $66 million, with the operating margin dropping to 8.9% from 22.2% a year ago. Similarly, the RF and Optical Communications (RF&OC) sub-segment saw revenue decline by 19.2% year-over-year, with operating income decreasing by 59.0% to $43 million, and the operating margin dropping to 13.9% from 27.4% the previous year.
Looking ahead, STMicroelectronics forecasts second-quarter 2025 net revenues at a mid-point of $2.71 billion, representing a 16.2% year-over-year decrease but a 7.7% sequential increase. The company expects a gross margin of approximately 33.4%, plus or minus 2 percentage points, with idle capacity charges estimated to negatively impact the gross margin by about 4.2 percentage points. This forecast assumes a USD to Euro exchange rate of approximately 1.08 dollars to 1.00 euro. For full-year 2025, STMicroelectronics maintains its non-GAAP capital expenditure plan in the range of $2.0 billion to $2.3 billion, primarily to support its manufacturing transformation initiatives.
