Stellantis gained after the carmaker unveiled a share buyback of as much as €1.5bn (about R29bn), following Mercedes-Benz and BMW in returning cash to shareholders after high prices and pent-up demand boosted results.
Operating returns rose to 13% last year, Stellantis said on Wednesday, beating expectations, even as persisting supply-chain snarls disrupted vehicle deliveries during the second half. Industrial free cash flow was also well ahead of analyst forecasts. The shares gained as much as 3.4% in Milan and were up 1.7% on the day.
“It’s a very solid print,” Oddo BHF analyst Michael Foundoukidis wrote in a note. Stellantis “surprised positively” with the buyback.
The company, forecasting another year of double-digit returns, expects vehicle price rises to slow from last year’s significant hikes as chip shortages ease and production picks up. Lower raw material costs, particularly on steel, will help temper price inflation, CFO Richard Palmer said.
“Price increases were substantial in 2022 and they will be lower in 2023,” Palmer said. “The challenge for 2023 is to offset inflation with pricing, but also with an improvement in industrial efficiency.”
Problems in moving finished cars to dealers should improve in the first half, the CFO said. Automakers are still struggling to source enough parts, with logistics disruptions adding to the fray to delay deliveries. Truck driver and train shortages during the second half left thousands of cars stuck at Stellantis’s Sochaux plant in eastern France, with peer Volkswagen also reporting that disruptions left it with a glut of unsold vehicles.
While the problem was industry-wide, Stellantis was probably hit harder as it sought to combine logistics operations after its merger of Fiat Chrysler and PSA Group at a time of significant stress in global logistics operations, Palmer said.
The disruptions came up initially in moving cars “from plants to compounds and from compounds to dealers'" he added. “We’ve largely resolved the issue from plants to compounds” and lingering constraints in delivering finished cars to dealers are improving.
Meanwhile chip supplies also “continue to be a problem", the CFO said. “We are seeing a slow but steady improvement”, but shortages are unlikely to be fully resolved in 2023, he added.
Strong orders
Stellantis’s order book remains strong, Palmer said, chiming with peers across the industry citing pent-up demand as a buffer against a slowing global economy. While price cuts at carmakers including Tesla and Ford on EVs don’t bode well for the months ahead, Stellantis rival Renault this month said it expects rising returns after overhauling its model offering.
Incentives to entice buyers could increase in North America through the year as supply improves, “but at the moment we are not seeing any significant moves from our competition, Tesla aside”, Palmer said. “Everyone is still being very disciplined on the pricing front, but it’s good to plan for some level of price stabilisation in 2023.”
Stellantis said all of its regions were growing and delivering record profitability last year, including Europe. The manufacturer will pay a dividend of €1.34 a share, up from €1.04 the previous year. Combined with the buyback, the company is planning to return about €5.7bn (about R110bn) to shareholders.
The buyback will run until the end of the year, Stellantis said. Separately, the company will redistribute more than €2bn (roughly R38bn) to its employees globally as the maker of Jeep SUVs and Peugeot cars seeks to protect its workforce from higher inflation.
More stories like this are available on bloomberg.com
Stellantis rises on surprise buyback, strong earnings
Image: Bloomberg
Stellantis gained after the carmaker unveiled a share buyback of as much as €1.5bn (about R29bn), following Mercedes-Benz and BMW in returning cash to shareholders after high prices and pent-up demand boosted results.
Operating returns rose to 13% last year, Stellantis said on Wednesday, beating expectations, even as persisting supply-chain snarls disrupted vehicle deliveries during the second half. Industrial free cash flow was also well ahead of analyst forecasts. The shares gained as much as 3.4% in Milan and were up 1.7% on the day.
“It’s a very solid print,” Oddo BHF analyst Michael Foundoukidis wrote in a note. Stellantis “surprised positively” with the buyback.
The company, forecasting another year of double-digit returns, expects vehicle price rises to slow from last year’s significant hikes as chip shortages ease and production picks up. Lower raw material costs, particularly on steel, will help temper price inflation, CFO Richard Palmer said.
“Price increases were substantial in 2022 and they will be lower in 2023,” Palmer said. “The challenge for 2023 is to offset inflation with pricing, but also with an improvement in industrial efficiency.”
Problems in moving finished cars to dealers should improve in the first half, the CFO said. Automakers are still struggling to source enough parts, with logistics disruptions adding to the fray to delay deliveries. Truck driver and train shortages during the second half left thousands of cars stuck at Stellantis’s Sochaux plant in eastern France, with peer Volkswagen also reporting that disruptions left it with a glut of unsold vehicles.
While the problem was industry-wide, Stellantis was probably hit harder as it sought to combine logistics operations after its merger of Fiat Chrysler and PSA Group at a time of significant stress in global logistics operations, Palmer said.
The disruptions came up initially in moving cars “from plants to compounds and from compounds to dealers'" he added. “We’ve largely resolved the issue from plants to compounds” and lingering constraints in delivering finished cars to dealers are improving.
Meanwhile chip supplies also “continue to be a problem", the CFO said. “We are seeing a slow but steady improvement”, but shortages are unlikely to be fully resolved in 2023, he added.
Strong orders
Stellantis’s order book remains strong, Palmer said, chiming with peers across the industry citing pent-up demand as a buffer against a slowing global economy. While price cuts at carmakers including Tesla and Ford on EVs don’t bode well for the months ahead, Stellantis rival Renault this month said it expects rising returns after overhauling its model offering.
Incentives to entice buyers could increase in North America through the year as supply improves, “but at the moment we are not seeing any significant moves from our competition, Tesla aside”, Palmer said. “Everyone is still being very disciplined on the pricing front, but it’s good to plan for some level of price stabilisation in 2023.”
Stellantis said all of its regions were growing and delivering record profitability last year, including Europe. The manufacturer will pay a dividend of €1.34 a share, up from €1.04 the previous year. Combined with the buyback, the company is planning to return about €5.7bn (about R110bn) to shareholders.
The buyback will run until the end of the year, Stellantis said. Separately, the company will redistribute more than €2bn (roughly R38bn) to its employees globally as the maker of Jeep SUVs and Peugeot cars seeks to protect its workforce from higher inflation.
More stories like this are available on bloomberg.com
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