Stock market crash for Stellantis. The group led by Carlos Tavares started the week in the red, after the announcement of the downward revision of its estimates for 2024. The stock lost up to 14%, dragging Piazza Affari with it.
After Volkswagen, Mercedes and BMW, it was Stellantis’ turn today to cut margin and cash flow estimates. The reasons? Performance issues in North America and the deterioration of the global industry. The group now expects an adjusted operating margin of between 5.5% and 7%, down from the previous double-digit target. About two-thirds of the reduction was due to corrective measures in North America, while sales were lower than expected in several regions. Furthermore, industrial free cash flow is expected between -5 and -10 billion, against the previous positive estimate. As for operating profit, it was adjusted by 9.3-11.9 billion, when the consensus estimate was 15.8 billion.
The group led by Carlos Tavares is accelerating its inventory reduction plan in the USA, aiming for 330 thousand units in stock by the end of 2024 and no longer by the first quarter of 2025. The group also expects a reduction in deliveries of over 200 thousand vehicles by the end of the year (against the 100 thousand estimated in the previous guidance), an increase in incentives on 2024 and previous models and an increase in productivity with adjustments to costs and production capacity.
This means fewer profits in 2024 and therefore fewer dividends to distribute to investors. And so the stock lost 14% on Piazza Affari at the beginning of the week and this brings the group closer to practically halving its capitalization in just a few months: from almost 70 billion to just over 35 billion. All this while rumors spread of a possible marriage between Stellantis and Renault to face the present and the future.
On Friday, German Volkswagen made the same move (for the second time this year) by cutting its guidance: profit margin raised from 7% to 5.6% (below the consensus of 6.5%). This morning, the English company Aston Martin announced that it has revised its operating margin and industrial free cash flow downwards for the year.
Stellantis is certainly not alone, but all this confirms the urgency of a sector, fundamental for Europe and in the midst of a crisis. What brought him this far were the problems due to the pandemic and the Russia-Ukraine war (boom in the cost of raw materials and energy and supply interruptions) and the 2035 objective/obligation with the energy transition to be achieved by fighting against the Chinese competition.
