By Giulio Piovaccari
MILAN (Reuters) -Carmaker Stellantis beat forecasts on Wednesday with a 17% rise in operating profit for the second half of last year, fuelled by savings from its founding merger and prices increases that helped offset lingering supply chain problems.
The company, created just over two years ago from the merger of Fiat Chrysler and Peugeot maker PSA, announced a dividend of 4.2 billion euros ($4.48 billion), or 1.34 euros per share. It also said it would launch a share buyback programme worth up to 1.5 billion euros to be completed this year.
Milan-listed shares in the world’s third largest automaker by sales rose as much as 3.4% in early trading and were up 1.5% at 0900 GMT, outperforming a 0.8% fall in Italy’s blue-chip index.
Adjusted earnings before interest and tax (EBIT) came in at 10.95 billion euros for July-December, topping analysts’ consensus estimate in a Reuters poll of 9.63 billion euros.
The margin on adjusted EBIT was 12% in the second half, down from 14.1% in the first six months of the year. But the company still met its target for a “double digit” margin last year.
Industrial free cash flows topped 10.8 billion last year.
Stellantis said it had achieved cash synergies of 7.1 billion euros last year, far exceeding in advance the 5 billion euro target by 2024 it set at the time of the merger.
“This speaks to the fast conversion and execution of the team within Stellantis organisation,” Chief Financial Officer Richard Palmer said.
He added results were also helped by good growth in global sales of electric vehicles, pricing power and a positive exchange rate effect linked to a strong U.S. dollar, “despite various challenges in the marketplace, with semiconductors, logistics, raw materials, energy and inflation”.
Increased industrial costs had an overall impact on the group’s results last year of over 9 billion euros.
Vehicle deliveries fell 2% last year, mainly due to semiconductors and logistics constraints, especially in Europe.
“Challenges continue in securing capacity for (vehicle) outbound transportation (to customers),” Palmer said.
“Semiconductors continue to be a problem, I don’t think the situation will be fully resolved in 2023,” he added.
($1 = 0.9383 euros)
(Reporting by Giulio Piovaccari; Editing Jan Harvey and Mark Potter)
