FILE PHOTO: A view of the slicing and grinding room at a STMicroelectronics plant in Catania, Italy May 31, 2024. REUTERS/Toby Sterling/File photo
AMSTERDAM (Reuters) -STMicroelectronics reported a second-quarter loss on Thursday, its first in more than a decade, falling short of market expectations as it took a $190-million hit for restructuring and impairment costs.
Shares in the French-Italian chipmaker, which makes power chips for Tesla's drivetrains and eSim modules for Apple's iPhones, closed down 16.6%, its largest single day loss.
The company, one of Europe's largest chipmakers, posted an operating loss of $133 million for the quarter, missing the average $56.2 million profit that was forecast by analysts in an LSEG poll.
STMicro said that, without the $190 million in impairment, restructuring charges and other costs, the company would have registered a quarterly profit of $57 million - in line with market expectations.
STMicro's heavy reliance on in-house manufacturing, representing about 80% of sales, has burdened it with underused factories and high staff costs when the market slows, unlike rivals Infineon and NXP that use more contract manufacturing, analysts say.
Chipmakers exposed to the struggling automotive, industrial, and consumer chip markets such as STMicro, Texas Instruments, or NXP have faced a sales slump, hit by low demand, high inventories, and geopolitical disruptions.
"Investors probably wanted to see more recovery," analyst Utsav Sinha of AlphaValue said in an emailed comment about Thursday's earnings report.
COST-CUTTING PLAN
STMicro's CEO Jean-Marc Chery was more upbeat about the outlook for the rest of the year.
"If we have a booking dynamic in Q3 on a similar path of what we have seen in Q2 and in Q1, we should expect in Q4 to grow sequentially," he said during a call with investors.
Analysts said that, while the stronger sales trend suggested STMicro could achieve revenue growth this year, potential U.S. trade tariffs could cloud the outlook.
In June, the company said it saw the early signs of an upcycle, or a period of increased market demand, which would allow it to hit its second-quarter revenue goal of $2.71 billion.
Revenue rose to $2.76 billion in the second quarter from $2.52 billion in the previous quarter, ahead of that target. STMicro said it is now expecting revenue in the third quarter to reach $3.17 billion, ahead of analysts' expectations of $3.10 billion.
STMicro unveiled a cost-cutting plan last year to restructure its manufacturing facilities and save hundreds of millions of dollars by 2027.
The plans, which included axing 5,000 jobs in France and Italy over the next three years, started a spat between the French and Italian governments, which jointly own a stake of 27.5% in the firm.
(Reporting by Nathan Vifflin in Amsterdam; Editing by Matt Scuffham, Clarence Fernandez and Helen Popper)
