NXP Semiconductors said the Covid-19 outbreak had a worse-than-expected impact on its results in the first quarter. After already lowering its guidance at the start of March, the company cut the outlook again due to a deterioration in demand.
Under the new forecast, revenue is expected at just over USD 2.02 billion for the quarter, down 12.2 percent from the fourth quarter of 2019 and 3.5 percent lower year-on-year. The company previously forecast annual growth of around 6 percent at the midpoint of its guidance.
The gross margin is estimated at 49.3 percent, compared to the original guidance of 50.8-51.4 percent, and operating profit is expected at USD 68 million, versus the earlier forecast of USD 165-193 million. NXP noted these are estimates and the numbers could vary as it finalises the Q1 results.
The company said the supply chain had largely recovered after the Chinese New Year holiday, but demand was deteriorating significantly. In the automotive sector, market demand fell quickly in March as production lines were shut down around the world, while many customers in the industrial and mobile segments have been pushing out orders to later dates. NXP said it also chose not to ship USD 150 million in orders to distributors in order to keep channel inventory at normal levels of around 2.4 months of supply.
The current customer demand environment "remains quite fluid", and the company plans to try to provide further guidance at its Q1 report on 28 April. NXP said liquidity remains "excellent" with estimated cash of USD 1.1 billion at the end of March as well as an untapped revolving credit facility of USD 1.5 billion.
