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Stellantis, the multinational automaker behind brands like Jeep, Dodge, and Chrysler, announced a 48% decrease in net profit for the first half of 2024, primarily due to declining sales and production issues in the U.S. market.
The company reported a net profit of €5.6 billion ($6.07 billion) for the first six months, a significant drop from the same period in 2023. Adjusted operating profit fell to €8.5 billion, down by €5.7 billion, largely attributed to challenges in North America.
Following the announcement, Stellantis shares in Milan dropped by 8.5%.
CEO Carlos Tavares acknowledged the underperformance, citing a tough industry landscape and internal operational difficulties. He emphasized that many problems originated from the U.S. operations, which have been plagued by inventory mismanagement, production lags, and flawed sales strategies.
Tavares, addressing the media, reiterated the ongoing efforts to resolve these issues and criticized the extensive cost-cutting measures that had been previously implemented. “The local team needs to focus on profit, sharing, and customer satisfaction. Blaming budget cuts is an easy out, but it’s not the solution,” he stated.
The company’s U.S. sales fell about 16% in the first half of the year, and its market share in North America dropped to 8.2%, a decline of 1.8 percentage points.
Despite these challenges, Stellantis maintained its 2024 outlook, aiming for a double-digit adjusted operating margin, positive industrial free cash flow, and at least €7.7 billion in returns to investors through dividends and share buybacks. Tavares expressed confidence in achieving these targets with the help of 20 new model launches, resolving U.S. market issues, and implementing further price reductions to stimulate sales. He also did not rule out additional job cuts.
“This is a highly competitive industry, and we must strive to achieve our goals,” Tavares said. “We will have to work diligently to deliver the expected results.”
Stellantis’ report follows the earnings announcements from U.S. automakers General Motors and Ford. GM exceeded Wall Street expectations and raised its financial targets, while Ford reported a drop in adjusted profit, which disappointed investors.
For the first half of the year, Stellantis recorded a net turnover of €85 billion, a 14% decrease compared to the previous year.
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