STMicroelectronics Outlines 2027-2028 Financial Model and Path
Towards 2030 Ambition
PR No: C3296C
STMicroelectronics Outlines 2027-2028
Financial Model
and Path Towards 2030 Ambition
- Setting an intermediate
financial model: ~$18B revenues and 22-24% operating margin in
2027-2028
- Reiterating $20B+ revenue
ambition and associated financial model, now expected to be reached
by 2030
Geneva, November 20, 2024
- STMicroelectronics (NYSE:STM),
a global semiconductor leader serving customers across the spectrum
of electronics applications, is hosting today its Capital Markets
Day in Paris, France. Within the framework of an unchanged
strategy, ST is reiterating its $20 billion plus revenue ambition
and associated financial model, that it now expects to be reached
by 2030. ST is also setting an intermediate financial model with
revenues expected around $18 billion with an operating margin
within a 22% to 24% range in 2027-2028.
With the execution of its manufacturing
reshaping program and cost base resizing initiative, ST expects to
exit 2027 with high triple-digit million-dollar savings compared to
the current cost base. This will enable the company to reach an
operating margin between 22 and 24% in 2027-2028.
ST’s value proposition remains focused on
sustainable and profitable growth, providing differentiating
enablers to customers with a strong commitment to sustainability.
With its customers and partners, ST will continue to be a key actor
of the transformation of all industries towards a smarter, safer
and more sustainable future.
Summary table
|
Intermediate model
(2027-2028) |
$20B Ambition
(By 2030) |
Revenues |
~$18B |
$20B+ |
Gross Margin |
~44-46% |
~50% |
Operating Margin |
~22-24%2 |
>30% |
Free Cash Flow1 Margin |
~20%2 |
>25% |
Financials assume a currency exchange rate of approximately
$1.09 = €1.00.
Full Capital Markets Days list of presenters and agenda:
The event will cover ST’s strategy, key market
trends and growth opportunities, developments in manufacturing,
technology and products, and value creation:
- Welcome – Jerome Ramel, Executive
Vice President, Corporate Development & Integrated External
Communication
- Opening remarks – Jean-Marc Chery,
President & CEO
- Analog, Power & Discrete, MEMS
and Sensors Group – Marco Cassis, President, Analog, Power &
Discrete, MEMS and Sensors Group, Head of Strategy, System Research
and Applications, Innovation Office
- Microcontrollers, Digital ICs and
RF Products Group – Remi El-Ouazzane, President, Microcontrollers,
Digital ICs and RF products Group
-
Technology & Manufacturing – Fabio Gualandris, President,
Quality, Manufacturing, & Technology
- Financial overview – Lorenzo
Grandi, President and Chief Financial Officer
- The presentations will be followed
by a Q&A session.
ST’s Capital Markets Day will be webcast live
from Paris, France, on Wednesday, November 20 from 9.00am to 1.15pm
Central European Times (CET) / 3.00am to 7.17am US Eastern Time
(ET). The live webcast featuring video, audio and presentation
slides will be accessible on ST’s website cmd.st.com. All
presentation materials can also be downloaded from the website
immediately prior to the start of the webcast. After the conclusion
of the event, a recording will be made available on the
website.
Forward-looking Information
Some of the statements contained in this
release that are not historical facts are statements of future
expectations and other forward-looking statements (within the
meaning of Section 27A of the Securities Act of 1933 or Section 21E
of the Securities Exchange Act of 1934, each as amended) that are
based on management’s current views and assumptions, and are
conditioned upon and also involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those anticipated by such
statements due to, among other factors:
- changes in global trade
policies, including the adoption and expansion of tariffs and trade
barriers, that could affect the macro-economic environment and
adversely impact the demand for our products;
- uncertain macro-economic and
industry trends (such as inflation and fluctuations in supply
chains), which may impact production capacity and end-market demand
for our products;
- customer demand that differs
from projections which may require us to undertake transformation
measures that may not be successful in realizing the expected
benefits in full or at all;
- the ability to design,
manufacture and sell innovative products in a rapidly changing
technological environment;
- changes in economic, social,
public health, labor, political, or infrastructure conditions in
the locations where we, our customers, or our suppliers operate,
including as a result of macroeconomic or regional events,
geopolitical and military conflicts, social unrest, labor actions,
or terrorist activities;
- unanticipated events or
circumstances, which may impact our ability to execute our plans
and/or meet the objectives of our R&D and manufacturing
programs, which benefit from public funding;
- financial difficulties with any
of our major distributors or significant curtailment of purchases
by key customers;
- the loading, product mix, and
manufacturing performance of our production facilities and/or our
required volume to fulfill capacity reserved with suppliers or
third-party manufacturing providers;
- availability and costs of
equipment, raw materials, utilities, third-party manufacturing
services and technology, or other supplies required by our
operations (including increasing costs resulting from
inflation);
- the functionalities and
performance of our IT systems, which are subject to cybersecurity
threats and which support our critical operational activities
including manufacturing, finance and sales, and any breaches of our
IT systems or those of our customers, suppliers, partners and
providers of third-party licensed technology;
- theft, loss, or misuse of
personal data about our employees, customers, or other third
parties, and breaches of data privacy legislation;
- the impact of intellectual
property (“IP”) claims by our competitors or other third parties,
and our ability to obtain required licenses on reasonable terms and
conditions;
- changes in our overall tax
position as a result of changes in tax rules, new or revised
legislation, the outcome of tax audits or changes in international
tax treaties which may impact our results of operations as well as
our ability to accurately estimate tax credits, benefits,
deductions and provisions and to realize deferred tax
assets;
- variations in the foreign
exchange markets and, more particularly, the U.S. dollar exchange
rate as compared to the Euro and the other major currencies we use
for our operations;
- the outcome of ongoing
litigation as well as the impact of any new litigation to which we
may become a defendant;
- product liability or warranty
claims, claims based on epidemic or delivery failure, or other
claims relating to our products, or recalls by our customers for
products containing our parts;
- natural events such as severe
weather, earthquakes, tsunamis, volcano eruptions or other acts of
nature, the effects of climate change, health risks and epidemics
or pandemics in locations where we, our customers or our suppliers
operate;
- increased regulation and
initiatives in our industry, including those concerning climate
change and sustainability matters and our goal to become carbon
neutral by 2027 on scope 1 and 2 and partially scope 3;
- epidemics or pandemics, which
may negatively impact the global economy in a significant manner
for an extended period of time, and could also materially adversely
affect our business and operating results;
- industry changes resulting from
vertical and horizontal consolidation among our suppliers,
competitors, and customers; and
- the ability to successfully
ramp up new programs that could be impacted by factors beyond our
control, including the availability of critical third-party
components and performance of subcontractors in line with our
expectations.
Such forward-looking statements are subject
to various risks and uncertainties, which may cause actual results
and performance of our business to differ materially and adversely
from the forward-looking statements. Certain forward-looking
statements can be identified by the use of forward-looking
terminology, such as “believes”, “expects”, “may”, “are expected
to”, “should”, “would be”, “seeks” or “anticipates” or similar
expressions or the negative thereof or other variations thereof or
comparable terminology, or by discussions of strategy, plans or
intentions.
Some of these risk factors are set forth and
are discussed in more detail in “Item 3. Key Information — Risk
Factors” included in our Annual Report on Form 20-F for the year
ended December 31, 2023 as filed with the Securities and Exchange
Commission (“SEC”) on February 22, 2024. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in this press release as anticipated, believed
or expected. We do not intend, and do not assume any obligation, to
update any industry information or forward-looking statements set
forth in this release to reflect subsequent events or
circumstances.
Unfavorable changes in the above or other
factors listed under “Item 3. Key Information — Risk Factors” from
time to time in our Securities and Exchange Commission (“SEC”)
filings, could have a material adverse effect on our business
and/or financial condition.
About STMicroelectronics
At ST, we are over 50,000 creators and makers of
semiconductor technologies mastering the semiconductor supply chain
with state-of-the-art manufacturing facilities. An integrated
device manufacturer, we work with more than 200,000 customers and
thousands of partners to design and build products, solutions, and
ecosystems that address their challenges and opportunities, and the
need to support a more sustainable world. Our technologies enable
smarter mobility, more efficient power and energy management, and
the wide-scale deployment of cloud-connected autonomous things. We
are committed to achieving our goal to become carbon neutral on
scope 1 and 2 and partially scope 3 by 2027. Further information
can be found at www.st.com.
For further information, please contact:
INVESTOR RELATIONS:
Jérôme Ramel
EVP Corporate Development & Integrated External
Communication
Tel: +41 22 929 59 20
jerome.ramel@st.com
MEDIA RELATIONS:
Alexis Breton
Group VP Corporate External Communications
Tel: + 33 6 59 16 79 08
alexis.breton@st.com
Appendix
ST
Supplemental Non-U.S. GAAP Financial
Information
U.S. GAAP – Non-U.S. GAAP Reconciliation
The supplemental non-U.S. GAAP information
presented in this press release is unaudited and subject to
inherent limitations. Such non-U.S. GAAP information is not based
on any comprehensive set of accounting rules or principles and
should not be considered as a substitute for U.S. GAAP
measurements. Also, our supplemental non-U.S. GAAP financial
information may not be comparable to similarly titled non-U.S. GAAP
measures used by other companies. Further, specific limitations for
individual non-U.S. GAAP measures, and the reasons for presenting
non-U.S. GAAP financial information, are set forth in the
paragraphs below. To compensate for these limitations, the
supplemental non-U.S. GAAP financial information should not be read
in isolation, but only in conjunction with our consolidated
financial statements prepared in accordance with U.S. GAAP.
ST believes that these non-U.S. GAAP financial
measures provide useful information for investors and management
because they offer, when read in conjunction with ST’s U.S. GAAP
financials, (i) the ability to make more meaningful
period-to-period comparisons of ST’s on-going operating results,
(ii) the ability to better identify trends in ST’s business
and perform related trend analysis, and (iii) to facilitate a
comparison of ST’s results of operations against investor and
analyst financial models and valuations, which may exclude these
items.
Net Capex and Free Cash Flow (non-U.S.
GAAP measures)
ST presents Net Capex as a non-U.S. GAAP
measure, which is reported as part of our Free Cash Flow (non-US
GAAP measure), to take into consideration the effect of advances
from capital grants received on prior periods allocated to
property, plant and equipment in the reporting period.
Net Capex, a non-U.S. GAAP measure, is defined
as (i) Payment for purchase of tangible assets, as reported plus
(ii) Proceeds from sale of tangible assets, as reported plus (iii)
Proceeds from capital grants and other contributions, as reported
plus (iv) Advances from capital grants allocated to property, plant
and equipment in the reporting period.
ST believes Net Capex provides useful
information for investors and management because annual capital
expenditures budget includes the effect of capital grants. Our
definition of Net Capex may differ from definitions used by other
companies.
Free Cash Flow, which is a non-U.S. GAAP
measure, is defined as (i) net cash from operating activities plus
(ii) Net Capex plus (iii) payment for purchase (and proceeds from
sale) of intangible and financial assets and (iv) net cash paid for
business acquisitions, if any.
ST believes Free Cash Flow provides useful
information for investors and management because it measures our
capacity to generate cash from our operating and investing
activities to sustain our operations.
Free Cash Flow reconciles with the total cash
flow and the net cash increase (decrease) by including the payment
for purchases of (and proceeds from matured) marketable securities
and net investment in (and proceeds from) short-term deposits, the
net cash from (used in) financing activities and the effect of
changes in exchange rates, and by excluding the advances from
capital grants received on prior periods allocated to property,
plant and equipment in the reporting period. Our definition of Free
Cash Flow may differ from definitions used by other companies.
1 Non-U.S. GAAP measure. See Appendix for
additional information explaining why the Company believes these
measures are important.
2 Excluding one-offs
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