(News Bulletin 247) – Ahead of its day dedicated to investors, the automobile manufacturer confirmed its objectives both for the first and second half of the year and for the year 2024. The company also announced that it intended to increase the distribution rate of dividend at 30% next year, compared to 25% in recent years.

D-day for Stellantis. The automobile manufacturer born from the merger between Fiat Chrysler and Peugeot SA in January 2021 is holding its day dedicated to investors this Thursday, with a presentation which will begin at 2 p.m. French time.

The group led by Carlos Tavares should update its roadmap to achieve its target of 300 billion euros in revenue in 2030 (compared to 189.5 billion in 2023) that it had set as part of its plan long-term strategic plan “Dare Forward”, unveiled during a previous investor day in 2022.

Beforehand, Stellantis carried out a small communication with the market. The group has confirmed its objectives for 2024, namely a double-digit current operating margin and positive industrial free cash flow.

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Return excess liquidity to shareholders

The group also reiterated the interim outlook that had been communicated by its financial director, Natalie Knight, during the conference call which followed the first quarter revenues. The group anticipates a current operating margin of 10% to 11% in the first half, as well as “significantly lower” cash generation than in the same period of 2023. Stellantis then expects, in the second half, an improvement cash flow and margin, compared to the first six months of the year, thanks to vehicle launches and cost initiatives.

The really new point comes from capital management. Stellantis has indicated that it is targeting a level of liquidity (money available and immediately available) which would represent between 25% and 30% of its medium-term revenues. With this target, the group intends to “emphasize capital efficiency and promote high returns for shareholders”.

Excess capital will be returned to shareholders in the form of share buybacks and dividends. Moreover, Stellantis announced that in 2025 it would aim for the “higher range” of its distribution policy (this range being between 25% and 30% of net profit) “compared to 25% “in recent years”.

Slightly vague instructions

“We see that Stellantis wants to return more cash to shareholders. But the problem is that, when they talk about the excess cash that could be returned in the form of share buybacks, they do not quantify nothing, it remains quite vague,” underlines an analyst. “It’s a shame, especially when General Motors announced, two days ago, a share buyback program of 6 billion dollars after a previous one of 10 billion in November,” he adds.

As a reminder, Stellantis announced at the start of the year that it would return $7.7 billion in cash to its shareholders both in the form of share buybacks and dividends.

Royal Bank of Canada believes that the company, in view of its financial balance sheet, has the means to increase this return to the shareholder in the future “if the company is capable of generating at least the same net profit and the same flow “of free cash flow” than in 2023. “Of course, the next question is about the risk to earnings and free cash flow, given high prices and dealer inventories,” adds the Canadian bank.

On the Paris Stock Exchange, Stellantis shares fell by 2.2% around 12:10 p.m. in a market that was in sharp decline, with the CAC 40 losing 1% at the same time. The automotive sector is in a bad direction since Renault also lost 1.5%. “Auto manufacturers are cyclical stocks so it is normal that they fall more than the market. And perhaps French manufacturers are also weighed down by the current political situation in France,” continues the previously cited analyst.