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Stellantis issued a cautionary statement on Thursday, anticipating a challenging year ahead after experiencing a 10% decline in operating profit during the second half of 2023.
The decrease was attributed to strikes in North America, a key profit center for the company.
Impact of North American Strikes:
Long stoppages resulting from union strikes in North America significantly impacted Stellantis’ operations, leading to a decline in operating profit.
These strikes concluded with substantial salary increases for workers at major automakers, further complicating the industry’s outlook.
Stellantis faces numerous challenges in the automotive sector, including tepid global demand for electric vehicles, heightened competition from Chinese manufacturers, ongoing cost pressures, and repercussions from geopolitical tensions.
Financial Performance:
Despite the challenges, Stellantis exceeded analysts’ expectations by reporting an adjusted operating profit of 10.2 billion euros for July-December, surpassing the consensus estimate of 9.54 billion euros.
However, the company’s margin on adjusted operating profit decreased to 11.2% in the second half, down from 12.3% in the previous year.
Market Response:
Stellantis’ shares on the Milan stock exchange reached an all-time high of 23.22 euros, rising by as much as 2.8% in early trading, reflecting investor optimism despite the company’s cautious outlook.
Analysts at Bernstein noted that while Stellantis’ results exceeded expectations regarding operating profit and cash generation, the company’s vague guidance for 2024 did not instill confidence among investors.
Stellantis’ Outlook:
Despite higher labor costs in North America, Stellantis maintained its forecast for double-digit margins on adjusted operating profit and positive industrial free cash flow for the current year.
CFO Natalie Knight emphasized the company’s commitment to this outlook, which has remained consistent over the past two years.
