ON Semiconductor’s second-quarter earnings report revealed the firm improved its operating income by 132 percent from the first quarter. The manufacturer also exceeded the high end of the revenue range it offered in May.
For the third quarter, the company expects either a slight loss or meaningful improvement in its sales as its target markets recover from the coronavirus pandemic.
ON Semiconductor’s Q2 2020 Earnings
For the period ending July 3, ON Semiconductor made $1.213 billion, down 10 percent from the revenue it brought in the same time last year. However, the company recorded operating income of $43.1 million, up considerably from the $18.6 million it made last quarter. The brand posted a net loss of -$1.4 million, a 90 percent improvement quarter-over-quarter.
The electronic component firm also outpaced the sales estimate of $1.1 billion to $1.2 billion it provided with its first-quarter earnings results.
The company attributed its weak revenue generation to the ongoing effects of the coronavirus pandemic. The firm’s automotive business bore the brunt of the global health crisis’s financial impact, falling 25.5 percent from last quarter. As global economic contraction prompted consumers to put off large purchases, worldwide vehicle sector revenues have plummeted.
That said, some of ON Semiconductor’s other businesses experienced sequential growth during the second quarter. The company’s computing segment sales rose by 16 percent while its industrial, medical, and military-aerospace income increased by 9.8 percent.
Measured but Positive Q3 Outlook
In Q3, ON Semiconductor estimates it will bring in $1.2 billion and $1.33 billion. Based on that range, the firm anticipates either a 1 percent decrease or a 9.64 percent increase in sales. Three key factors inform the company’s measured but positive outlook.
One, the brand began producing 300mm wafers at its East Fishkill, New York factory ahead of schedule, which should improve its gross margins. Two, the firm noted its observed signs of recovery in its core end-markets and regions, which should buoy its revenue. And third, the manufacturer secured several automotive, cloud-power, and industrial design wins that will have a positive long-term impact on its bottom line.
The company’s outlook is supported by a recent Bloomberg report detailing the rebounding of the world’s largest automotive market.
Although global macroeconomic conditions will likely continue to hamper ON Semiconductor’s growth, the firm is on the road to prosperity.