STMicroelectronics Reports Lower-than-Expected Q4 Revenue despite Gains in Personal Electronics

STMicroelectronics, the European chip maker, announced slightly disappointing fourth-quarter revenue and gross margin results. While there were gains in the personal electronics sector, slower growth in the automotive business offset these positive developments.

Q4 Revenue Falls Below Targets

In the fourth quarter, net revenue for STMicroelectronics dropped by 3.2% to $4.28 billion compared to the same period the previous year. This figure was slightly below the company's target of $4.30 billion, as well as the $4.30 billion that analysts predicted according to Factset.

The company stated, "In Q4, our customer order bookings decreased compared to Q3. We continued to see stable end-demand in Automotive, no significant increase in Personal Electronics, and further deterioration in Industrial."

Decline in Gross Profit and Net Profit

Gross profit, a crucial metric closely monitored by the company, fell by 7.3% to $1.95 billion in the fourth quarter, resulting in a gross margin of 45.5%, down from 47.5%. STMicroelectronics had initially anticipated a gross margin of 46% for the quarter.

Net profit also declined by 14% to $1.08 billion during this period. However, this figure surpassed the Factset poll of 14 analysts' expectation of $903 million for net profit.

Operating Income Decreases

Furthermore, operating income saw a decrease of 20.5% to $1.02 billion, resulting in an operating margin of 23.9%, down from 29.1%.

Full-Year Results and Future Outlook

Despite the challenging fourth quarter, STMicroelectronics reported that its full-year net revenue increased to $17.29 billion from $16.13 billion in 2022, meeting its $17.3 billion target. Additionally, the gross margin for 2023 stood at 47.9%, up from 47.3% and in line with the company's goal of approximately 48.1%.

Looking ahead, the chip maker has set a revenue target of between $15.9 billion and $16.9 billion for 2024, with a gross margin percentage in the low-to-mid 40s.

For the first quarter of the year, STMicroelectronics is aiming for a net revenue of $3.6 billion and a gross margin of 42.3%. However, these projections are subject to currency exchange rates and include the impact of hedging contracts.

To support its future endeavors, STMicroelectronics plans to invest approximately $2.5 billion in capital expenditures in 2024.