Jeep parent Stellantis posts profit beat as EV transition begins
Jeep, Dodge, and Ram trucks parent Stellantis reported profits that beat estimates for the first half of the year while noting the auto market has grown "more competitive" on pricing.
For the first six months of 2023, the automaker reported revenue of 98.4 billion euros ($108.8 billion) and adjusted operating income of 14.1 billion euros ($15.6 billion), which topped Reuters estimates for profits of 12.1 billion euros ($13.4 billion). These figures were up 12% and 11%, respectively, compared to the first half of last year.
Stellantis's (STLA) adjusted operating income margin fell 10 basis points to 14.4% while its industrial free cash flow, which backs out certain non-core activities, jumped 64% to 8.66 billion euros ($9.58 billion).
Stellantis stock was up nearly 3% following these results.
"If the market is more competitive in terms of pricing, we need to work harder on cost reduction to make sure that we give back to the market the breathing space it needs while protecting our per unit margins," CEO Carlos Tavares said regarding pricing compared to a year ago, when higher MSRPs boosted margins.
Stellantis reaffirmed its 2023 guidance for double-digit adjusted operating income margin and positive industrial free cash flow, and said its 1.5 billion euro ($1.66 billion) buyback program was on track.
“Our outstanding performance in the first half of this year supports our long-term sustainability and our ability to achieve the bold ambitions of our Dare Forward 2030 [electrification] plan,” Tavares said in the company's earnings release. "We are well-positioned for the remainder of 2023 and beyond."
Stellantis, which formed in 2021 when Fiat Chrysler merged with Peugeot parent PSA Group, said global shipments rose 9% to 3.2 million vehicles in the first half of the year, mainly due to supply chain constraints easing, and a "normalization' of inventory levels.
In the US, Stellantis said it was the top seller of plug-in hybrid vehicles, mainly due to the success of the Jeep Wrangler and Grand Cherokee 4xe models. Stellantis said its first fully electric vehicles will arrive in the US this fall with the Ram ProMaster and Fiat 500. Eight more battery electric vehicles are slated to arrive in the US in 2024, with the Dodge Charger Daytona, Wagoneer S, Jeep Recon, and Ram 1500 Rev pickup among others.
Stellantis did not mention in its earnings outlook any impact from potential work stoppages in US, as the United Auto Workers union (UAW) and fellow Big Three automakers GM and Ford hold ongoing labor talks. The current UAW collective bargaining agreement with the Big Three ends on Sept. 14.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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