ST had Q1 net revenues down 18.4% y-o-y at $3.47 billion for a gross profit down 31.6% y-o-y at $1.44 billion, a gross margin of 41.7%, an operating margin of 15.9% and  net income of $513 million.

Q1 free cash was $134 million after Net Capex of $967 million

For Q2, net revenues of $3.2 billion and gross margin of 40% are expected.

For the full year, revenues of $14-15 billion are expected, down from a previous expectation of $15.9 billion to $16.9 billion.

“Q1 net revenues and gross margin both came in below the midpoint of our business outlook range, driven by lower revenues in Automotive and Industrial, partially offset by higher revenues in Personal Electronics,” said CEO Jean-Marc Chery (pictured) , “on a year-over-year basis, Q1 net revenues decreased 18.4%, operating margin decreased to 15.9% from 28.3% and net income decreased 50.9% to $513 million.”

“During the quarter, Automotive semiconductor demand slowed down compared to our expectations, entering a deceleration phase, while the ongoing Industrial correction accelerated,” added Chery, “our second quarter business outlook, at the mid-point, is for net revenues of $3.2 billion, decreasing year-over-year by 26.0% and decreasing sequentially by 7.6%; gross margin is expected to be about 40%.”

“We will now drive the Company based on a revised plan for FY24 revenues in the range of $14 billion to $15 billion. Within this plan, we expect a gross margin in the low 40’s,” said Chery, “we plan to maintain our Net Capex plan for FY24 at about $2.5 billion focusing on our strategic manufacturing initiatives.”

Quarterly Financial Summary (U.S. GAAP)

Net  revenues totalled  $3.47 billion, representing a year-over-year decrease of 18.4%. Year-over-year net sales to OEMs and Distribution decreased 11.5% and 30.8%, respectively. On a sequential basis, net revenues decreased 19.1%, 320 basis points lower than the mid-point of ST’s guidance.

Gross profit totaled $1.44 billion, representing a year-over-year decrease of 31.6%. Gross margin of 41.7%, 60 basis points below the mid-point of ST’s guidance, decreased 800 basis points year-over-year, mainly due to the combination of sales price and product mix, unused capacity charges and reduced manufacturing efficiencies.

Operating income decreased 54.1% to $551 million, compared to $1.20 billion in the year-ago quarter. ST’s operating margin decreased 1,240 basis points on a year-over-year basis to 15.9% of net revenues, compared to 28.3% in the first quarter of 2023.