Stellantis Reports 27% Revenue Decline in Q3

By Giulio Piovaccari and Gilles Guillaume
MILAN (Reuters) – Reduced shipments and lower pricing power slashed Stellantis (NYSE:STLA) revenue by 27% in the third quarter, the automaker announced as it seeks to address bloated inventories and poor commercial performance that led to a significant profit warning last month.

The results published on Thursday were slightly better than expected, as Stellantis shares rose 2.3% at 1035 GMT, making them the best performers on the Milan bourse's blue chips.

"Inventory reduction in the United States is occurring at a quicker rate than anticipated," said new finance chief Doug Ostermann on a conference call. He expects to decrease inventories at US dealers by 100,000 vehicles ahead of an end-November target.

Stellantis reported total inventories of 1.33 million units as of September 30, a decrease of 129,000 year-on-year. In the United States, dealer inventories fell by over 80,000 between June 30 and October 30.

Ostermann, who previously led Stellantis' operations in China, recently replaced Natalie Knight as part of a management reshuffle aimed at correcting strategic errors, particularly in North America.

Stellantis faces unique challenges that are compounded by broader struggles for Western automakers, including soft global demand—especially for electric vehicles (EVs)—technological transition difficulties, and increased competition from Chinese manufacturers.

Volkswagen, Europe’s leading automaker, is considering shutting at least three factories in Germany and laying off tens of thousands of workers as part of a more radical than expected overhaul.

Stellantis' stock has lost about 40% of its value this year. Analysts at Citi remain cautious, citing little upside despite sharp underperformance, owing to expected further deterioration in pricing power globally, competition from China, and new EU emissions and EV market penetration regulations set for 2025.

Potential Dividend and Share Buyback Cuts

Stellantis confirmed on Thursday its recently reduced full-year results guidance. After a 40% decline in adjusted operating income (EBIT) in the first half, Stellantis forecasts a full-year adjusted operating profit margin of 5.5-7%, down from a previous double-digit estimate, and possible cash burn of up to 10 billion euros.

The company has also signaled possible cuts to dividends and share buybacks in 2025, although Ostermann expressed confidence that the board will discuss "the right level of dividend next year."

Ostermann stated, "Given where the stock price is at, I think it would be very appropriate for us to also be talking about a buyback program for next year," though he noted nothing is finalized yet.

He added that Stellantis chose not to narrow the full-year guidance to allow flexibility in taking necessary actions to align inventories as needed by year-end.

Third Bridge analyst Orwa Mohamad mentioned that Stellantis needs to introduce new products and expand into more segments, potentially launching more European models in the United States under the Jeep brand. Acquisitions in North America could also be considered to bolster the portfolio.

Mohamad anticipates margin recovery in 2025, coinciding with Stellantis’ plans for major launches in key higher-margin segments.

Stellantis reported third-quarter revenues of 33 billion euros ($35.8 billion), surpassing analyst expectations of 31.1 billion euros, according to a Reuters poll conducted after October 16, when Stellantis first provided preliminary quarterly sales and shipment forecasts.

Shipments fell 21% to 1.17 million vehicles. According to Ostermann, gaps in the product lineup primarily drove the decline, though he expects those gaps to begin closing.

The company aims to launch approximately 20 new models across 2024, including the new Peugeot 3008 mid-sized SUV, Citroen's hybrid C3 and fully electric e-C3, and Alfa Romeo's sporty compact SUV Junior, as confirmed by the group.