NXP expects better Q3 after sharply lower Q2

NXP Semiconductor, whose results were hit hard by the coronavirus pandemic in the first quarter, confirmed second quarter revenues continued to be affected, especially at its automotive end market. The results were nevertheless in line with forecasts, and the company said it is encouraged by the early positive trends it experienced in China and by the sequentially improved sales out of its distribution channel. NXP expects sales trends to improve in the second half of the year, helped by specific programme ramps and ongoing stabilisation at end markets. 

Revenues for the quarter fell 18 percent year-on-year to USD 1.8 billion. Industrial & IoT revenues lifted 12 percent to USD 435 million but the gains were not able to offset the 35 percent fall at automotive to USD 674 million, the 14 percent decline at mobile to USD 255 million and the 9 percent decrease at communication infrastructure and other to USD 453 million.

The group operating profit sank 192 percent to a loss of USD 145 million while the adjusted operating profit slipped 41 percent to USD 376 million. The gross margin slid to 47.3 percent from 51.9 percent. The operating cash flow amounted to USD 414 million with net capex at USD 74 million, resulting in an adjusted free cash flow of USD 340 million. 

The company said it will still distribute a dividend for the quarter, of USD 0.375 per share, and that it returned USD 108 million to shareholders in the quarter, mainly through previously announced dividend payments. 

Looking towards the third quarter, NXP is guiding for revenues of USD 1.9-2.1 billion, a gross profit market of 46.4-48.5 percent and an operating result ranging from a loss of USD 105 million to a gain of USD 12 million. The adjusted operating profit is seen at USD 386-503 million.