The Press Stories
Stellantis, the global auto giant, faced a 10% decline in profit during the second half of 2023 due to strikes at Detroit Three automakers, which disrupted production in North America. The company reported adjusted operating income of 10.2 billion euros for the July-to-December period, down from 11.3 billion euros in the same period in 2022. However, the earnings were more resilient than expected, surpassing analysts’ forecast of 9.54 billion euros.
Following the announcement of the results, Stellantis shares saw a significant increase of over 4% in European morning trade. Nevertheless, the company faced challenges in its North American operations, with the operating income margin falling to 15.4% due to production disruptions and labor agreement costs. The strikes cost the company $3.2 billion in revenue through October.
To resolve the labor disputes, Stellantis reached an agreement with the United Auto Workers union. The agreement includes an $18.9 billion investment in the U.S. by 2028 and various benefits for workers, such as wage increases and the reopening of an idled plant in Illinois. Stellantis workers ratified the deal, indicating their endorsement of the terms.
CEO Carlos Tavares acknowledged the weak performance of Stellantis’ U.S. operations in 2023, with declining sales and market share. However, he expressed confidence that 2024 will bring improvement. Tavares stated that North American executives will have more flexibility in marketing and incentives, highlighting the company’s commitment to revitalizing its presence in the region.
Despite the impact of the strikes, Stellantis reported strong earnings for the entire year of 2023. The company achieved net revenues of 189.5 billion euros, a 6% increase from 2022. Adjusted operating income for the year amounted to 24.3 billion euros, up 1%, while industrial free cash flows rose by 19% to 12.9 billion euros.
To further benefit shareholders, Stellantis proposed a dividend increase of 16% and announced a share buyback program of 3 billion euros for 2024. Looking ahead, the company expects to achieve a minimum double-digit adjusted operating income margin in 2024 and positive industrial free cash flow, despite uncertainties in the macroeconomic environment.
Overall, although Stellantis faced challenges due to strikes in 2023, the company’s resilient earnings and commitment to improve its North American operations provide a positive outlook for the future.
