MILAN – Reduced shipments and lower pricing power slashed Stellantis (NYSE: STLA) revenue by 27% in the third quarter, the automaker said on Thursday as it seeks to fix bloated inventories and poor commercial performance that led to a major profit warning last month.
However, the result was slightly better than expected, with Stellantis shares up 2.65% in premarket trading.
“Inventory reduction in the United States is running at a faster rate than expected,” new finance chief Doug Ostermann said on a call, adding he expected to reduce inventories at U.S. dealers by 100,000 vehicles ahead of an end-November target.
Stellantis (NYSE: STLA) said total inventory stood at 1.33 million units as of Sept. 30, down 129,000 year-on-year. In the United States, total inventory at dealers fell by over 80,000 between June 30 and October 30.
Ostermann, who previously headed Stellantis’ operations in China, replaced Natalie Knight this month as part of a top management reshuffle aimed at correcting strategic mistakes, especially in North America.
Stellantis’ specific problems are combining with broader struggles for Western automakers, including soft global demand, especially for electric vehicles (EVs), technological transition challenges, and increased competition from Chinese peers.
Europe’s biggest automaker Volkswagen is assessing plans to shut at least three factories in Germany and lay off tens of thousands of staff, in a more radical than expected overhaul.
Stellantis’ shares have lost over 40% of their value this year.
On Thursday, analysts at Citi said they remain cautious on them, seeing “little upside… despite the sharp underperformance this year”, amid expected further pricing power deterioration globally, Chinese competition, and 2025 European Union rules on emissions and EV market penetration.
SIGNALS POSSIBLE DIVIDEND AND SHARE BUYBACK CUTS
On Thursday, Stellantis (NYSE: STLA) confirmed its recently reduced full-year results guidance.
After posting a 40% decline in adjusted operating income (EBIT) in the first half, Stellantis last month forecast a full-year adjusted operating profit margin of 5.5-7%, down from a previous double-digit estimate, and cash burn of up to 10 billion euros.
It also signaled possible cuts to its dividend and share buybacks in 2025, although Ostermann said on Thursday he was confident the board will discuss “the right level of a dividend next year”.
“Given where the stock price is at, I think it would be very appropriate for us to also be talking about a buyback program for next year,” he said, adding however that nothing was determined yet.
Third Bridge analyst Orwa Mohamad said Stellantis needed to introduce new products and expand into additional segments, potentially launching more European models in the United States under the Jeep brand.
“They may also need to consider acquisitions in North America to strengthen their portfolio,” he said.
Mohamad added margin recovery was likely in 2025 as Stellantis plans major launches in key segments with higher margins.
Stellantis (NYSE: STLA) posted third-quarter revenues of 33 billion euros ($35.8 billion), beating analyst expectations of 31.1 billion euros, according to a Reuters poll run after Oct. 16, when Stellantis, for the first time, provided preliminary forecasts on its quarterly unit sales and shipments.
Shipments fell 21% to 1.17 million vehicles. Gaps in the product lineup were the main driver of the decline, Ostermann said, though he added those gaps should start to close.
The company said it remained on track to launch approximately 20 new models across 2024.
Among them, the new Peugeot 3008 mid-sized SUV, Citroen’s hybrid C3 and fully electric e-C3, and Alfa Romeo’s sporty compact SUV Junior have already reached the streets or are available to order, the group said.
($1 = 0.9215 euros)
(Source: Reuters)
