Stellantis sees profits slide in first half of 2024

Stellantis saw its profits slide in the first half of 2024 as it continued to deal with operational challenges in North America.

Stellantis, which owns the Jeep, Ram, Chrysler, Dodge and Fiat brands, on Thursday reported net profit of $6 billion (5.6 billion euros) for the first six months of the year, down 48% from the same period in 2023; net revenues of $92 billion (85 billion euros), down 14%, and adjusted operating income of $9.2 billion (8.5 billion euros), representing a 10% margin. The company said its adjusted diluted earnings per share dropped 35%.

During its last full earnings report, for the final six months of 2023, Stellantis said it made a net profit of $8.3 billion (7.7 billion euros).

The company said its financial performance "was driven principally by lower volumes and mix, with the challenging volume comparison due to a combination of inventory reduction initiatives, temporary product production gaps due to a generational portfolio transition and lower market share, particularly in North America."

CEO Carlos Tavares called the results "disappointing and humbling," but he said that the company's issues are being addressed and "we'll get through."

In a roundtable with reporters Thursday morning, Tavares noted that the profitability of the company's North American region dropped from No. 1 to No. 4, and he said it needs to be No. 1.

In North America, the company reported net revenues of $41.62 billion (38.4 billion euros), down from $49.75 billion (45.9 billion euros); and adjusted operating income of $4.73 billion (4.4 billion euros), down from $8.67 billion (8 billion euros), with a margin of 11.4%, down from 17.5%, compared with the same period in 2023. The company did not appear to break out its net profit and loss figures by region. Vehicle shipments in the region fell from more than 1 million to 838,000.

Tavares: 'Corrective actions ... are being taken'

Still, the company said it is reiterating its guidance for the full year of a double-digit margin in adjusted operating income as well as positive industrial free cash flow despite "macroeconomic uncertainties." It highlighted numerous electric vehicle launches this year, including the Dodge Charger Daytona, Jeep Wagoneer S and Recon and Ram 1500 REV.

Tavares said in a news release that the results fell short of expectations, "reflecting both a challenging industry context as well as our own operational issues. While corrective actions were needed and are being taken to address these issues, we also have initiated an exciting product blitz, with no fewer than 20 new vehicles launching this year, and with that brings bigger opportunities when we execute well. We have significant work to do, especially in North America, to maximize our long-term potential."

But Tavares also pointed to difficult times ahead for the automotive industry in general, possibly for several years.

"It's to me a no-brainer that this industry is going to be in turmoil," he said.

Stellantis has struggled with lower sales in the key U.S. market in recent reporting periods and has seen numerous executives depart. It reported a 21% U.S. sales slide in the second quarter of this year compared with the same period in 2023. The company plans to reduce production in the third quarter of this year, according to posted earnings documents.

During the roundtable with reporters, Tavares was asked about the potential for more job cuts in metro Detroit. He didn't say they're off the table, but he suggested that the company is looking at its marketing to address some of its issues.

However, he did point to problems at U.S. plants, saying that situation still needs to be fixed, something he has alluded to in the past. Later in the conversation, he identified the direct run rate as an issue at Sterling Heights Assembly Plant, which produces the Ram 1500 pickup. The rate, which involves the number of vehicles that need to be reworked before they can be shipped to dealerships, isn't good, he said.

Ford Motor Co. and General Motors also released earnings this week, but those numbers represented second-quarter, rather than half-year, results. Ford reported net income of $1.8 billion, and GM said it had net income of $2.9 billion, according to Free Press reporting.

Contact Eric D. Lawrence: elawrence@freepress.com. Become a subscriber. Submit a letter to the editor at freep.com/letters.