By Stellantis, the world’s third-largest carmaker, reported a 13% drop in net profits in the second half of 2023, due to the impact of strikes in North America, its main source of income. The company, which was formed by the merger of Peugeot PSA and FCA FiatChrysler in 2023, said it expects a “turbulent” year ahead, amid geopolitical uncertainty and supply chain challenges.
Stellantis said its net profit in the second half of 2023 was 7.7 billion euros ($8.3 billion), down from 8.8 billion euros in the same period of 2022. The company attributed the decline to the strikes in North America, which disrupted its production and sales for six weeks in the fall of 2023.
The strikes, which involved all three Detroit automakers, resulted in a new labor deal that increased wages and benefits for the workers, and forced the carmakers to absorb higher costs as they transition to electric vehicles. Stellantis said the collective bargaining in North America cost it 428 million euros in 2023.
Stellantis’ revenues in North America, which accounted for nearly half of its total revenues, fell by 5.6% in the second half of 2023, to 40.5 billion euros, from 43 billion euros in the same period of 2022. The company also lost market share in the region, as it faced competition from rivals such as Toyota and Tesla.
Stellantis Performed Well in Other Regions and Segments
Stellantis said it performed well in other regions and segments, despite the challenging market conditions and the global semiconductor shortage, which affected the automotive industry worldwide. The company said it increased its market share in Europe, South America, and the Middle East, and improved its profitability and cash flow.
Stellantis’ revenues in Europe were flat in the second half of 2023, at 31.7 billion euros, while its revenues in South America were also unchanged, at 8.4 billion euros. The company’s revenues in the Middle East surged by 71%, to 5.9 billion euros, while its revenues in China, India, and the Pacific region declined by 33%, to 1.5 billion euros.
Stellantis said it achieved a record operating margin of 11.4% in the second half of 2023, up from 10.8% in the same period of 2022. The company also generated a positive free cash flow of 5.5 billion euros in the second half of 2023, up from 4.8 billion euros in the same period of 2022.
Stellantis Expects a “Turbulent” Year Ahead
Stellantis said it expects a “turbulent” year ahead, as it faces geopolitical uncertainty and supply chain challenges, especially related to the availability of semiconductors and raw materials. The company said it is confident in its ability to adapt and overcome these difficulties, and to achieve its financial and strategic objectives.
Stellantis said it plans to invest more than 30 billion euros in the next five years, to accelerate its electrification and digitalization strategy, and to launch more than 40 new electric models by 2025. The company also said it aims to reduce its carbon footprint by 40% by 2030, and to achieve carbon neutrality by 2050.
Stellantis said it rewarded its shareholders with 6.6 billion euros in 2023, through dividends and share buybacks, up from 4.3 billion euros in 2022. The company said it plans to increase its dividend by 16% in 2024, to 1.55 euros per share, and to buy back another 3 billion euros of shares.