(News Bulletin 247) – The semiconductor group, the first CAC 40 company to deliver its results, reported a drop in its turnover of 3.2% over one year, slightly stronger than in its forecasts. The group expects revenues to fall by 15% in the first quarter.

If the Dutch ASML delighted the Stock Exchange on Wednesday, after delivering its quarterly results, this is for the moment not the case for its Franco-Italian comparable STMicroelectronics.

The first CAC 40 group to publish its accounts for the last three months and for the whole of 2023, STMicroelectronics is currently receiving a cool reception from the market. The stock dropped 2.2% around 11:20 a.m. after opening down 4.5%.

The company experienced a decline in its commercial momentum over the last three months of 2023. “In the fourth quarter, order intake from our customers decreased compared to the third quarter. We continued to see stable final demand in the automotive, a lack of significant increase in personal electronics and a further deterioration in industrial”, explained Jean-Marc Chéry, the company’s general manager, quoted in a press release.

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Disappointing 2024 targets

STMicro’s revenue fell 3.2% year-on-year and 3.4% from the previous quarter to $4.28 billion, slightly less than the company’s median forecast. company which stood at $4.3 billion. The consensus was $4.35 billion according to UBS.

If the group’s automotive products recorded growth of 21.5%, STMicro was penalized by the decline in its two other divisions, namely “analog products, MEMS and sensors” (-25.8%). , used in particular in smartphones, and microcontrollers and digital integrated circuits (-11.5%).

The company’s gross margin stood at 45.5% compared to 47.5% a year earlier. The company expected 46%. Net profit fell 13.8% year-on-year to $1.076 billion.

Regarding its outlook, STMicroelectronics indicated that in the first quarter it expects a drop in its turnover of more than 15% year-on-year, to 3.6 billion dollars while the gross margin is forecast at around 42. 3%.

And for the whole of 2024, STMicro anticipates revenues of between 15.9 billion and 16.9 billion dollars, compared to 17.3 billion in 2023. The gross margin is forecast “between a minimum greater than 40% and a maximum of around 46%,” the company said.

UBS notes that the consensus expected, for the first quarter of 2024, a turnover of 4.1 billion dollars and a gross margin of 45.2%. As for the full year 2024, expectations were at $17.4 billion for revenue and 46% for gross margin. The differences are therefore relatively large.

Destocking among manufacturers

“However, we believe that the reduction in forecasts was well anticipated by the ‘buy-side’ (investors, editor’s note) and we expect a minor reaction from the stock today”, underlines UBS. “The stock is trading at a share price to expected earnings ratio of around 16 and is potentially close to a bottom in terms of earnings in 2024, which constitutes an element of support in our eyes,” says the Swiss bank which reiterated his advice to buy.

Jean-Marc Chéry told analysts that the first half of 2024 would be penalized by a “correction” of stocks among industrial customers. These customers overestimated their final demand, continued the manager, who however added that he did not see “pressure on prices” however.

Starting in the second half, STMicro expects “significant sequential revenue growth, driven by a strong rebound in the industrial and computer peripherals sectors, continued growth in automotive and communications equipment , and the usual seasonality of personal electronics”.

“After several years of revenue growth and increased profitability, we view 2024 as a year of transition,” the company concluded.

“STMicroelectronics gave a sufficiently low outlook on the gross margin to be able to exceed it subsequently and the market was in any case waiting for a ‘reset’ (a rethinking, Editor’s note) of the forecasts. Management remains confident in the prospects of the “automobile, excluding ADAS (driving assistance systems)”, deciphers a financial intermediary.