New Jeep vehicles sit on a Dodge Chrysler-Jeep Ram dealership’s lot on October 03, 2023 in Miami, Florida.
Joe Raedle | Getty Images News | Getty Images
Auto giant Stellantis on Thursday reported a steep drop in first-half net profit, citing reduced volumes, temporary production gaps and lower market share in North America.
The company, which owns household names including Jeep, Dodge, Fiat, Chrysler and Peugeot, reported first-half net profit of 5.6 billion euros ($6.07 billion), down 48% from the same period of 2023.
Stellantis’ adjusted operating income for the first six months of 2024 came in at 8.5 billion euros, down 5.7 billion euros on the year, primarily due to decreases in North America.
Milan-listed shares of Stellantis fell around 8.5% on Thursday.
“The Company’s performance in the first half of 2024 fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues,” Stellantis CEO Carlos Tavares said in a statement.
Speaking to media, Tavares said that many of the firm’s problems stem from its U.S. operations, which he previously said were being impacted by “arrogant mistakes” regarding vehicle inventory levels, manufacturing problems and sales strategies.
He reiterated those problems Thursday, saying the company is still in the process of correcting many of the U.S. issues. Tavares pushed back on the company’s massive cost-cutting efforts leading to the problems. Several executives previously described the cuts to CNBC as grueling to the point of excessiveness.
“What is requested to the local team is profit, share and customer satisfaction,” Tavares said. “When you don’t deliver for any reason that I can understand and help to correct, you may want to use a scapegoat. The budget cut is an easy one. It’s wrong.”
The firm’s U.S. sales were down about 16% during the first half of the year, following Stellantis being the only major automaker in the U.S. to report a decline in sales last year compared to 2022.
The company’s North American market share during the first half of the year was 8.2%, down 1.8 percentage points.
Despite the ongoing problems, Stellantis reconfirmed its 2024 guidance that includes a double-digit adjusted operating income (AOI) margin, positive industrial free cash flow and at least 7.7 billion euros in capital return to investors in the forms of dividends and buybacks.
Tavares expects to be able to achieve those targets with the help of 20 new model launches this year, correcting the problems in the U.S. and additional price cuts to increase sales. He also did not rule out additional job cuts.
“This is a very tough industry, a very tough period and everybody has to fight for performance,” he said. “We will have to work hard to deliver that performance.”
Stellantis’ results come hot on the heels of second-quarter earnings from U.S. automakers General Motors and Ford Motor.
GM on Tuesday raised several key financial targets after comfortably beating Wall Street’s earnings expectations, while Ford on Wednesday reported a dip in adjusted profit, disappointing investors.
For its part, Stellantis posted first-half net revenues of 85 billion euros, down 14% compared to the same period a year earlier.