Stellantis has slashed its 2024 profit outlook as it wrestles with higher costs in the US and slower sales in major markets.
The company said adjusted operating income margin is now expected to be between 5.5 – 7.0% for the FY 2024 period, down from prior “double digit”. Roughly two-thirds of the reduced margin is driven by ‘corrective actions in North America’ the company said. Other contributors include lower than expected sales performance in the second half of the year across most regions.
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Industrial free cash flow is now expected to range from -€5 billion to -€10 billion, from prior projection of “positive”. This primarily reflects the substantially lower profit margin outlook as well as the impact of ‘temporarily elevated working capital in the second half of 2024’.
The company said it has accelerated its planned normalisation of inventory levels in the US, targeting no more than 330,000 units of dealer inventory by year-end 2024, from a prior timing objective of the first quarter of 2025. 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, and productivity improvement initiatives that encompass both cost and capacity adjustments.
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.
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