May 15, 2018 / 10:27 AM / 10 days ago

UPDATE 1-STMicro expects to grow twice as fast as peers in 2018

(adds executive comments, peer comparisons and stock action)

By Eric Auchard

LONDON, May 15 (Reuters) - Chipmaker STMicroelectronics on Tuesday forecast stronger-than expected sales growth of 14-17 percent in 2018, roughly twice the rate of industry peers, thanks to market share gains in auto, industrials and imaging markets.

The supplier of key components for Apple phones and Tesla vehicles is seeking to convince investors that ST can deliver sustained growth in sales, margins and market share, as it rebounds from setbacks earlier this decade.

At its annual Capital Markets Day, executives hammered home the theme that STMicroelectronics is far better positioned in the best parts of solidly growing automotive and industrial markets than industry peers, which include NXP, Renesas , Infineon and Texas Instruments.

The Franco-Italian electronic components maker expects to grow between 14-17 percent for the 2018 year, out-going Chief Executive Carlo Bozotti told investors in London.

“This is more than what we anticipated,” Bozotti said. “For this reason, we have reviewed our capital spending plan and (made) a moderate increase.”

Analysts, on average, had forecast 2018 revenues to grow around 14 percent, according to Thomson Reuters data. Last year, the company enjoyed a nearly 20 percent increase in revenue to $8.35 billion.

The company also said it planned to increase capital spending to improve the flexibility of its plant production to around $1.2 billion and $1.3 billion for the full year, up from its previous target of $1.1 billion. It spent $1.3 billion in 2017 as it raced to increase chip manufacturing capacity.

Chief Financial Officer Carlo Ferro, who is set to retire later in 2018, said ST is taking advantage of structural growth in automotive and industrial markets and in certain favourable segments of the otherwise lacklustre smartphone market.

The company’s recovery and growth has been held back by weak demand in the first half of 2018 for smartphones. Analysts blamed order delays from Apple for imaging chips used in the forthcoming upgrade of the iPhone X later this year.

The company generates 53 percent of sales from automotive and industrial end markets, compared to its peer group, which generates only 22 percent from these favourable growth markets. By contrast, ST’s exposure to smartphones is just 18 percent of its total revenue, versus 28 percent, on average, for key peers.

“We are ahead of the curve in the major trends,” Marco Cassis, the company’s designated sales chief, said of ST’s strong and growing share in chips used in advanced collision detection and electrification features for cars.

STMicroelectronics’ shares were up 2 percent in Paris at 1020 GMT, among the top performers in the blue-chip CAC-40 index. The stock is up around 13 percent year-to-date. (Reporting by Eric Auchard in London; Editing by Sudip Kar-Gupta and Alexandra Hudson)

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