NXP first quarter revenue down 3 percent due to COVID-19

NXP annual revenue down 3 percent due to COVID-19.
Image: NXP Semiconductors

NXP Semiconductors reported a three percent annual dip in first-quarter revenue this Monday, a decline the company predicted in its revised Q1 guidance. The Dutch firm’s sales took a hit because the coronavirus pandemic hurt demand for its core products.

The company also offered a second-quarter outlook that indicates continued soft sales through the spring.

NXP’s Q1 2020 Financial Results

NXP generated $2.02 billion in Q1 2020, down from $2.09 billion in Q1 2019. The firm also reported a net income loss of $13 million in the period ending March 31, an 18.75 percent improvement year-over-year.

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NXP’s sales fell in almost every category last quarter, including a four percent decline in its core automotive sensor business. The corporation moved $994 million worth of vehicle components in the first three months of 2020 compared to $1.036 billion in the same time frame last year. The division’s underperformance reflects the plummeting Q1 car and truck sales recorded by most major automakers earlier this month.

The firm’s smartphone and industrial/Internet of Things (IoT) sales both dropped by two percent year-over-year while it’s communication infrastructure & other revenue dipped by 10 percent.

On the bright side, NXP increased its DPO device revenue by 12 percent from last year. Besides, the semiconductor manufacturer exited the first quarter with $1.07 billion in cash and equivalents on hand. Moreover, the company returned $460 million to its shareholders in Q1 through a combination of dividend payments and stock repurchases.

The corporation’s ability to demonstrate value to its stakeholders likely helped its share price rise by three percent after announcing its financial results.

NXP’s Q2 Outlook

In a press statement, NXP CEO Richard Clemmer described current market conditions as “challenging and very fluid.” His firm’s second-quarter outlook reflected that adverse perspective as it forecasts revenue of $1.7 billion to $1.9 billion, down either 14 or 23 percent year-over-year. Bloomberg reports market analysts estimate the manufacturer will bring in $1.82 billion in sales in the current quarter.

The company also expects operating income of -$115 million to -$237 million versus $157 million in Q2 2019.

With almost half of its revenue coming from the automotive sector, NXP’s income is aligned with car sales. Right now, manufacturers are not placing big sensor orders because the coronavirus pandemic is suppressing demand for new vehicles. As such, the firm is unlikely to experience a significant rebound until sometime in the second half at the earliest.

That said, the legitimately innovative nature of NXP’s products and its robust balance sheet suggests it will emerge from the COVID-19 crisis battered but not broken.


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