Stellantis, the global auto giant, has reported a 10% year-on-year drop in profit for the second half of 2023. The decline in profit is attributed to the six-week strikes at the “Detroit Three” automakers, which disrupted production in Stellantis’ North American profit center. Despite the profit decrease, the earnings were more resilient than expected, surpassing analysts’ forecasts.
Adjusted operating income (AOI) for the July to December period was 10.2 billion euros ($10.96 billion), compared to 11.3 billion euros in the same period in 2022. The impact of industrial action led to a 100 basis points decline in the AOI margin in North America, falling to 15.4%. Stellantis cited production disruptions and costs related to new labor agreements as the primary reasons for the decline.
The strikes, led by the United Auto Workers (UAW) union, targeted not only Stellantis but also General Motors and Ford Motor. These strikes cost Stellantis $3.2 billion in revenue through October. However, the company reached an agreement with the UAW in late October, resulting in a $18.9 billion investment in the U.S. by 2028. The deal includes wage increases of at least 25% and the reopening of an idled plant in Illinois.
Despite the setbacks caused by the strikes, Stellantis reported strong overall earnings for 2023. Net revenues for the full year reached 189.5 billion euros, a 6% increase from 2022. Consolidated shipment volumes also rose by 7%. Adjusted operating income for 2023 increased by 1% to 24.3 billion euros, while industrial free cash flows saw a 19% increase to 12.9 billion euros.
In light of these results, Stellantis proposed a dividend of 1.55 euros per common share to shareholders, representing a 16% increase from the previous year. Additionally, the company announced a share buyback program of 3 billion euros for 2024.
Stellantis CEO Carlos Tavares expressed gratitude to the company’s teams for their contribution to the growth story, even in challenging circumstances. He stated, “Today’s record financial results are proof that we have become a new global leader in our industry and will remain rock solid as we look to a turbulent 2024.”
The news of Stellantis’ financial performance had a positive impact on the market, with the company’s shares jumping more than 4% in morning trade in Europe following the announcement. Despite the profit drop in the second half of 2023, Stellantis has demonstrated resilience and remains optimistic about its future prospects.