LONDON NXP Semiconductors (Eindhoven, the Netherlands) is blaming the economic downturn and decreased utilization rates for losses of $673 million in the first quarter, nearly 50 percent less than in the corresponding quarter a year ago. Pre-tax loss came in at $71 million, compared with profits of $183 million in Q1 2008.
Utilization rates at its factories declined to 36 percent in the first quarter, down from 56 percent in the fourth quarter of 2008 and 87 percent lower than achieved in the first quarter of last year.
"Visibility of sales development going forward remains extremely limited. The very weak macro-economic conditions are still continuing," NXP said , adding in a statement Wednesday (April 29) that conditions in the chip sector remain "extremely challenging."
The compnay said significant progress has been made in executing its Redesign Programme, which is now expected to achieve a higher level of savings than originally anticipated, and total restructuring costs are now expected to be no greater than $700 million.
NXP added it expected an increase in second-quarter sales, based on its book-to-bill ratio which went up to 1.18 in the first quarter from 0.71 in the fourth quarter.
"We believe the improved book-to-bill is primarily driven by supply chain replenishment as opposed to any fundamental improvement of the semiconductors market," NXP said, dampening any optimism.
Cash reserves remeianed steady at $1.7 billion at the end of the first quarter, which includes $92 million from the sale of the ST-NXP Wireless shares and $200m drawn down from NXPís revolving credit facility which is now at a total of $600m.
Last month the company made a new-for-old debt exchange, which will reduce the company's indebtedness by about $465 million.
Calls for major restucturing at NXP
Analysis: What's next for NXP?
KKR writes NXP down to 10% of purchase price
Analysis: Why NXP should opt for bankruptcy