Despite challenges from energy and raw material inflation as well as semiconductor scarcity, Stellantis was able to surpass profit projections in the first half of the year thanks to strong pricing power and sales of high-margin vehicles, especially electric ones.
“We are ahead of Tesla in Europe in electric vehicle sales, and not far from Volkswagen,” Richard Palmer, the chief financial officer, announced the figures on Thursday. On a proforma basis, operational income increased by 44 percent between January and June.
Stellantis, often viewed as a slacker in the electrification race, unveiled this year an ambitious goal to convert its whole range from conventional combustion engines to low-emission vehicles by 2030, more than doubling its current annual revenues.
Carlos Tavares, CEO, commented Stellantis, a company that owns the brands Fiat, Peugeot, and Dodge, “delivering an outstanding performance and executing its bold electrification strategy.”
“We are shaping Stellantis into a sustainable mobility tech company that’s fit for the future,” he said.
The fourth-largest automaker in the world reported first-half adjusted earnings before interest and tax (EBIT) of 12.4 billion euros ($12.7 billion), exceeding the 9.42 billion euros estimate of analysts in a Reuters poll.
Rival Volkswagen announced its full-year forecast on Thursday, but cautioned that the second half would likely be affected by the conflict in Ukraine and potential threats to the region’s energy supply.
The margins grow
By 0750 GMT, Stellantis, the business created at the start of 2021 through the union of Fiat Chrysler and Peugeot maker PSA, has seen a 3.8 percent increase in its shares trading on the Milan Stock Exchange. That beats an increase of 1.3 percent in the blue-chip index for Italy.
“Results are clearly very strong and surprising,” Gabriele Gambarova, the analyst at Banca Akros said.
Palmer claimed that the company was in a good position to handle the global surge in inflation thanks to its selection of high-end vehicles.
“We will look to pass rising inflation costs to customers on the market until feasible,” he said.
According to slides created for Stellantis’ financial presentation, net pricing contributed more than 5.8 billion euros to the company’s overall operating income in the first half.
The results were also aided by foreign exchange, according to Palmer, who said that a stronger dollar added almost $500 million to the first-half adjusted EBIT.
With double-digit results in each of the group’s five markets and a record 18.1 percent in North America, where Stellantis generated nearly half of its sales in the past six months, the adjusted EBIT margin increased to 14.1 percent from 11.4 percent a year earlier.
Palmer was dubious about finding a fix for the industry-wide scarcity of semiconductors, predicting that the problem will continue through the rest of this year.
“We see some improvements quarter by quarter, but it’s a slow process,” he said.
An operating income margin in the double digits and positive cash flow were both predictions made by Stellantis for the entire year.