(News Bulletin 247) – The semiconductor group published results above expectations for the third quarter and delivered outlooks slightly below consensus for the end of the year. The group has especially warned that it anticipates a drop in turnover between the last quarter of 2024 and the first of 2025.

Second largest decline in the CAC 40 (-44%) since January 1, STMicroelectronics has suffered in 2024. The Franco-Italian semiconductor manufacturer has had to repeatedly lower its outlook due to weak demand on several of its segments, particularly automobiles. Investors have since been waiting for visibility to improve before positioning themselves on the stock.

This will not be for today, when the group has published its third quarter accounts.

The results were generally above expectations. STMicroelectronics reported revenue of $3.25 billion in the period from July to the end of September, down 26.6% year-over-year, but up 0.6% quarter-over-quarter.

>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio

Slightly tight forecasts for the fourth quarter

“Compared to our expectations, our turnover was higher in personal electronics, fell less than expected in industrial and was lower in automobiles,” declared Jean-Marc Chéry, president of the company’s board of directors.

The gross margin, an indicator followed by the market, fell to 40.1%, compared to 47.6% a year earlier (and 37.8% in the second quarter), while the operating margin increased from 28%. at 11.6% over one year. Earnings per share fell by more than three to 38 cents.

According to a consensus cited by Stifel, analysts expected revenues of $3.24 billion, a gross margin of 38% and an operating margin of 9.8%.

For the fourth quarter, STMicro said it expects revenues of around $3.32 billion and a gross margin of 38% (mid-range for these two forecasts). This time, it is a bit below expectations, set at $3.36 billion for revenues and 39.1% for gross margin.

Following this new guidance, the company slightly lowered its 2024 revenue outlook, now expecting a total of approximately $13.27 billion, compared to a range of $13.2 billion to $13.7 billion. previously. The company also specifies that the gross margin will be “slightly below what was indicated (around 40%, Editor’s note).

A savings plan

Above all, Jean-Marc Chéry indicated that “based on the current order book and the current visibility in terms of demand, we anticipate a drop in turnover between the fourth quarter of 2024 and the first quarter of 2025, much greater than normal seasonality.

Which means that sluggish demand will spill over into 2025, notes Morgan Stanley, for whom this trend is explained by the weakness of semiconductors for the automobile industry.

“Many expected a lowering of the 24 year forecast (which it did) this quarter, but we believe the debate has shifted to 2025, where the decline is already apparent,” comments the American bank.

“With the comments on the first quarter, a year 2025 with very limited growth is possible (given the starting point of the first quarter)”, judges Oddo BHF.

On the Paris Stock Exchange, STMicroelectronics shares are not coping very well with these announcements. STMicroelectronics shares fell 3.2% around 3:50 p.m.

Alongside these results, the company announced “a business project” which will consist of “reshaping (its) industrial footprint”, including in particular the resizing of its “global cost base”.

“This project is expected to result in a strengthening of our ability to grow revenue with improved operational efficiencies, resulting in annual cost savings in the high triple-digit millions of dollars by the end of 2027,” explained Jean-Marc Chéry.