NXP Semiconductors trimmed its financial outlook for first quarter 2020, due to a worse than anticipated impact from the COVID-19 pandemic versus what the company had anticipated on March 2, 2020.
“Consistently during this challenging period, we have taken stringent actions to ensure the health and safety of all of our NXP team members and are extremely proud of their continued dedication,” said Richard Clemmer, NXP Chief Executive Officer. “Additionally, the impact to our first quarter results due to COVID-19 were more significant than we anticipated on March 2. While the supply chain disruption experienced post Lunar New Year in China appears to be subsiding, the end market demand trends in the rest of the world have started to significantly deteriorate. Throughout March, the demand headwinds accelerated in the automotive market where many global auto OEMs outside of China have shut production lines, and within the industrial and mobile markets where customer demand trends have resulted in the push-out of orders. We continue to be vigilant in the management of our distribution channel, aligning channel inventory to the sales out of the channel, and expect channel inventory to be consistent with prior periods, in the 2.4 months of supply range. Furthermore, we chose not to ship roughly $150 million of orders to our distribution partners in order to maintain our normal channel inventory. The current customer demand environment remains quite fluid and we will provide our best perspective for the second quarter during our earnings call on April 28.”
“While the demand environment is challenging, NXP continues to have a strong balance sheet and excellent liquidity. We expect our cash balance to be $1.1 billion as of the end of March, and in addition we have an untapped revolving credit facility of $1.5 billion, should we need it,” said Peter Kelly, NXP Chief Financial Officer.
