Stellantis, the global auto giant, has reported a 10% decline in profit for the second half of 2023. The decrease 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 fall, 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), down from 11.3 billion euros in the same period last year. However, this exceeded the market’s expectations of 9.54 billion euros. Following the release of the results, Stellantis shares rose more than 4% in morning trade in Europe.
In North America, Stellantis’ AOI margin dropped by 100 basis points year-on-year to 15.4%. The company attributed this decline to production disruptions and costs related to new labor agreements. In late October, Stellantis reported that the strikes by the United Auto Workers union had cost the company $3.2 billion in revenue through October. The strikes targeted not only Stellantis but also General Motors and Ford Motor.
However, despite the impact of the strikes, Stellantis reported strong earnings for the full year of 2023. Net revenues increased by 6% to 189.5 billion euros compared to 2022, and consolidated shipment volumes rose by 7%. Adjusted operating income for the year was up 1% to 24.3 billion euros, while industrial free cash flows increased by 19% to 12.9 billion euros.
To address the challenges posed by the strikes, Stellantis reached an agreement with the United Auto Workers union in late October. The agreement includes an investment of $18.9 billion in the U.S. by 2028. Stellantis workers in the U.S. ratified the deal, which includes wage increases of at least 25% and the reopening of an idled plant in Illinois, on November 17.
Despite the decline in profit, Stellantis remains optimistic about its future. The company proposed a dividend of 1.55 euros per common share to shareholders, representing a 16% increase from the previous year. Additionally, Stellantis announced a share buyback program of 3 billion euros for 2024.
Stellantis CEO Carlos Tavares expressed gratitude to the company’s teams for their contributions to its growth story, even in challenging times. 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.”
Overall, Stellantis’ financial performance in the second half of 2023 was impacted by strikes at the Detroit automakers. However, the company’s earnings were more resilient than expected, and it reported strong results for the full year. With plans for investments and a share buyback program, Stellantis remains confident in its position as a global leader in the automotive industry.