The Zhitong Finance App learned that Stellantis (STLA.US) released third-quarter results on October 28: net revenue of 37.611 billion euros, up 1% year on year, higher than market expectations of about 36.4 billion euros; net loss of 453 million euros, which is 90% narrower than the loss of 4.532 billion euros in the same period last year; adjusted operating profit of 256 million euros (US$285 million), slightly higher than the agreed market expectations, with a year-on-year increase of 184% and profit margin of 0.7%. The company kept its guidance unchanged throughout the year and reaffirmed the goal of positive industrial free cash flow in 2027.
The struggling carmaker is working to cut costs, improve quality, and launch new models to deal with increasing competition, particularly in Europe. Previously, the company's stock price fell by more than 60% during the year, and shares and debt hit a record low. This performance is a battle to defend the trust of CEO Filosa. CEO Antonio Filosa said that his plans to increase savings and better implement the new product lineup are progressing step by step.
Looking at the subregions, sales in Greater Europe and South America both increased by 3%; North America declined by 3% due to planned production shutdowns; and the Middle East, Africa, and Asia Pacific decreased by 19% and 7%, respectively.
At the business level, the market share in North America rose to 7.5%, and sales of the Ram brand increased 30% year over year. Driven by Zero Sports, sales of EU30 pure electric passenger cars increased 93%, and sales of Zero Sport increased nearly four times over the same period last year.
The European business continues to be an urgent challenge facing Filosa. Mass market brands such as Peugeot and Opel are facing fierce competition from rivals such as BYD, Volkswagen, and Renault. The region recorded an adjusted operating loss of €311 million, mainly due to lower prices and the shift of buyers to electric vehicles with lower returns.
The North American business saw a profit correction to 64 million euros, thanks to the launch of new models such as the Jeep Cherokee hybrid and the Ram 1500 Hemi. However, shipments for the quarter were still hampered by planned production stoppages.
The company maintains its forecast for positive cash flow next year, while reaffirming the guideline for a low single-digit adjusted operating margin for the whole year. However, industrial free cash flow for the quarter was negative 4.09 billion euros. Although the year-on-year improvement was about 300 million euros, it was worse than the negative 3.4 billion euros expected by the market, highlighting the gap between profit recovery and cash return in the process of reversing losses.
The company said that the value creation plan is expected to implement at least 40% of the 6 billion euro operating efficiency target by the end of the year, and the cost reduction effect in the fourth quarter will be about double that of the third quarter; at the same time, it suggests additional pressure on memory chips and recall costs. By the end of the quarter, the available industrial liquidity was 42.7 billion euros, still within the target range.
Prior to the release of the earnings report on Wednesday, analysts such as HSBC analyst Michael Tyndall said that US distributors' high unsold inventory was still a cause for concern.
Earlier this year, the company announced record asset write-offs and adjustments to its electric vehicle strategy while planning to address ongoing quality issues. Philosa combines these measures with investing around 60 billion euros in dozens of new models by 2030, giving priority to developing the Jeep, Ram, Peugeot, and Fiat brands. The company is also betting on cooperation with Zhejiang Zero Run Technology and Dongfeng Motor to help fill the underutilization of production capacity in some European factories.
This five-year strategic plan is difficult to gain market recognition. The company's stock price has fallen by more than 60% this year, making it the worst performing constituent stock in the European Stoxx 600 Index.
This month, Stellantis suspended operations at four of five car assembly plants in France to manage dealer inventories and deal with the shortage of long-life electric vehicle batteries. Several other European factories also stopped production this month, as the Group is facing shortages of auto parts and lower than expected demand for models such as the hybrid Fiat 500.
Stellantis said it will announce new plans for its luxury brand Maserati on December 10 in Modena, Italy.