Chipmaker NXP forecasts Q2 profit above estimates on industrial demand recovery (updated)

Volvo Car AB

29/04/2024 23:44

(Adds analyst comment in paragraph 8, rival's results in
paragraph 9)
       April 29 (Reuters) - NXP Semiconductors NV  NXPI.O 
forecast second-quarter profit above estimates on Monday, as
easing inventory corrections at its industrial and mobile
customers helped offset decelerating revenue from automotive
customers due to slowing EV demand.
    U.S.-listed shares of the Eindhoven, Netherlands-based
chipmaker rose 6% in extended trading. 
    After many quarters of working down existing chip inventory,
orders from industrial and mobile customers show signs of
rebounding. These markets were experiencing a chip supply glut
after a pandemic-fueled buying spree.
    Industrial and IoT revenue grew 14%, while mobile revenue
was up 34% in the first quarter. 
    However, the automotive market, NXP's biggest by revenue
share, is starting to see an inventory build-up.
    Expensive EVs have put off consumers already grappling with
higher-for-longer interest rates, hurting demand for the
company's automotive chips, some of which are used in advanced
driver-assistance system functions. 
    Revenue from the automotive segment fell 1% in the first
quarter. NXP had said in February that automotive revenue would
be down in the low single-digit percent range in the quarter.
    "Relative to its competitors and peers, NXP's first-quarter
results and its second-quarter outlook are clearly better," said
Summit Insights analyst Kinngai Chan. 
         Rival Mobileye Global  MBLY.O  
    reported
     a sharp fall in first-quarter revenue last week, hurt by
fewer orders for its driver-assistance chips.
  
    The company expects second-quarter adjusted earnings of
about $3.20 per share, compared to analysts' average estimate of
$3.11 per share, according to LSEG data. Its forecast for
second-quarter revenue was in line with estimates. 
    It also forecast a second-quarter adjusted gross margin of
about 58.5%, compared to an estimate of 58.1%. 
    NXP had increased pricing by about 8% in 2023 to help
maintain its margins in the face of higher input costs. The
company said in February it expects pricing to be flat in 2024. 

 (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Pooja
Desai)
 ((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))