Beleaguered Stellantis Cuts 2024 Financial Guidance

Stellantis N.V. (NYSE: STLA) today revised its 2024 financial guidance, “reflecting decisions to significantly enlarge remediation actions on North American performance issues, as well as deterioration in global industry dynamics.” Actions include North American shipment declines of more than 200,000 vehicles in the second half of 2024 (up from 100,000 prior guidance), compared to the prior year period, increased incentives on 2024 and older model year vehicles. (Read AutoInformed.com on: Stellantis Tanks in First Half of 2024 – Net Profit -48%)*

“The Company will continue to leverage and expand its competitive differentiators and believes that the recovery actions being put in place will ensure stronger operational and financial performance in 2025 and beyond,” Stellantis said in a terse release. “Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,” Stellantis said.

Earlier in September the UAW filed federal unfair labor practice charges at the National Labor Relations Board over what it says is Stellantis’ illegal refusal to provide information about the company’s plans regarding product commitments it made in the UAW’s 2023 collective bargaining agreement. Several UAW locals covering thousands of members have also filed contract grievances over the company’s attempt to move Dodge Durango production out of the United States, in violation of the UAW’s national agreement.

“In our 2023 contract, we won major gains, including a commitment to reopen an idled assembly plant in Belvidere, Illinois, and to build the Dodge Durango in Detroit. We also won the right to strike over those commitments, if we have to,” said UAW President Shawn Fain. “Now, Stellantis wants to go back on the deal. As a united UAW, we intend to enforce our contract, and to make Stellantis keep the promise.”Stellantis’s updated 2024 market outlook and financial guidance:

• Adjusted operating income (“AOI”) margin – Expected to be between 5.5 – 7.0% for the FY 2024 period, down from prior “double digit”. Roughly two-thirds of the reduced AOI margin is driven by corrective actions in North America. Other contributors include lower than expected sales performance in the second half of the year across most regions.
• Industrial free cash flow – Expected to range from -€5 billion to -€10 billion, from prior “Positive”. This primarily reflects the substantially lower AOI outlook as well as the impact of temporarily elevated working capital in the second half of 2024.

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