StMicroelectronics (Stm) updates the business plan. The group confirms its basic strategies but postpones its sales target of 2023 billion dollars by one year to 12. The thud in the stock market was immediate and an impact that slowed down the Ftse Mib. Stm shares are sunk to -12% after a very uncertain start since the news of a possible postponement of the sales target with a corresponding effect on Ebitda had spread since the opening.
Jean Marc Chery, managing director of the semiconductor group, confirmed during the last appointment of the Capital Markets Day that "there will not be a change in strategy, market focus and strategic objectives". However, the manager postponed the achievement of the most anticipated target to 2023, namely that of "becoming a company with 12 billion dollars in annual sales, with a corresponding model on the operating margin between 15% and 17%". Jean Marc Chery, chief executive officer of the semiconductor group, stressed that the group intends to "maintain and improve a solid capital structure", including through small and targeted acquisitions and collaborations with strategic partners. The long-term strategy focused on the smart mobility, power & energy and IoT & 5G divisions has been confirmed.
“We are determined to create value for shareholders in line with the objectives of sustainable and profitable growth – said the CEO, explaining that in the interest of shareholders, customers and employees “St confirms its strong commitment to sustainability”.
What changes, therefore, are the medium-term estimates. At 2023 Stm now expects revenues of 12 billion dollars, originally forecast at 2022, operating margin between 15% and 17% (against 17-19% estimated in 2019), gross margin between 39% and 40% ( from 40-41%), Ebitda margin between 25% and 26% (from 26-27%) and free cash flow exceeding one billion dollars, in line with previous forecasts.
“We reaffirm our commitment to innovation and growth and maintain the company's focus on innovation and digital transformation,” said Lorenzo Grandi, chief financial officer of StMicroelectronics, during the annual Capital Markets Day. For 2020, STM estimates a turnover of 9,97 billion dollars, up 4,3% compared to 2019, with a net profit of over 900 million, down from 1,032 billion last year.
The expected operating margin is down from 12,6% to around 12%, while the free cash flow will settle at around 500 million, substantially in line with the previous 497 million.
“The company has a bright future ahead of it, we see significant opportunities for profitability growth. We reaffirm our commitment to organic and self-financed growth and maintain our focus on long-term value creation”, concluded Grandi.
