STMicro shares slide as group warns of decline in Q4 margins By

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By Scott Kanowsky – STMicroelectronics NV EPA: posted a sharp rise in third-quarter, but warned that it expects its net margin to decrease over the rest 2022.

The Geneva-based semiconductor firm reported a 35.2% rise in net sales from the previous year to $4.32B in the three months ended October 1. This is due to higher levels of demand across all product groups and increased pricing to offset recent increases in input costs inflation.

The net income increased by 131.8% to just under $1.1B, compared to the previous year.

STMicroelectronics indicated that fourth-quarter net revenues growth would slow to 1.8%, compared to 12.6% in the previous period. Jefferies analysts stated that the revenue outlook was also below consensus.

The gross margin has also fallen to 47.3%, from 47.6% during the third quarter.

Although the company did not give any further details on its current business trends in its trading update, Jefferies analysts stated that the latest guidance suggests that there will be a decrease in demand for most of STMicroelectronics product areas other than automotive parts.

“Such weakness in financials will take a while to manifest, but it will eventually. [fourth quarter] Analysts warn that slowing sales momentum and gross margin could indicate problems ahead. They also warned that results could be affected next year.

STMicroelectronics shares plunged to the bottom of the pan European in early dealmaking on Thursday.

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