By Giulio Piovaccari and Gilles Guillaume
MILAN (Reuters) -Stellantis pledged on Thursday to take steps to address problems in North American and elsewhere, including cutting output and prices, after the world’s No. 4 carmaker delivered worse-than-expected first-half results, sending its shares down 10%.
“The company’s performance in the first half of 2024 fell short of our expectations,” CEO Carlos Tavares said in a statement.
Adjusted operating income (EBIT) fell 40% to 8.463 billion euros ($9.17 billion) in the half year to June 30, below the 8.85 billion euros expected by analysts in a Reuters poll.
The results pile more pressure on Tavares to revive flagging margins and sales and cut inventory in the United States as the carmaker bets on the launch of 20 new models this year which it hopes will boost profitability.
Its Milan-listed shares were down about 8% after earlier hitting their lowest since August 2023. They have lost 20% of their value this year, making them the worst performer among the major European carmakers.
Its margin on adjusted EBIT shrunk to just below 10%, slipping below the double-digit margin it aims to achieve for the full year.
Stellantis’ free cash flow was negative at almost 400 million euros in the first half.
“We are working hard to meet our full-year (adjusted operating income) margin forecast and to deliver positive cash flows in the second half,” CFO Natalie Knight told a media roundtable.
Stellantis forecast include positive industrial free cash flow for the year.
Stellantis said it was taking “decisive actions to address operational challenges” and CFO Knight said that, looking at the second half, the group was taking “the bulls by the horns”.
She said measures include inventory reduction and logistics, especially in North America, the group’s profit powerhouse.
“(That) is the market that needs the most work and where we are most concentrated when we look at the second half,” Knight said.
“There are operational issues we’ve had in North America where I think we could have performed stronger”.
The CFO added the group would reduce production in North America this quarter, as well as prices.
“That’s one of the things that is important for us, to calibrate how the supply and demand meet,” she said.
Analysts at Citi said in a note they expect Stellantis problems to continue.
“We see no real improvement until and unless Stellantis removes the overhang from inventories – which itself would put pressure on full-year …margins,” they wrote.
Japan’s Nissan Motor saw first-quarter profit almost completely wiped out on Thursday and slashed its annual outlook, as deep discounting in the United States shredded its margins.
($1 = 0.9226 euros)
(Reporting by Giulio Piovaccari in Milan and Gilles Guillaume in Paris; editing by Stephen Coates and Jason Neely)
