PARIS/MILAN (Reuters) -Stellantis reported on Thursday a 27% fall in its turnover in the third quarter, reduced by the forced reduction of its accumulated inventories in the United States and by poor performance commercial which led last month to a spectacular “profit warning”.

This drop is, however, slightly less marked than analysts thought and Stellantis shares gained 1.9% around 11:00 a.m., marking one of the best performances on the Milan Stock Exchange.

“The reduction of inventories in the United States is progressing at a faster pace than expected,” declared the new financial director of the automobile manufacturer born from the merger between PSA and FCA, Doug Ostermann, during a press conference call.

He added that he expects the goal of reducing U.S. dealer inventories by 100,000 vehicles to be achieved sooner than the end-of-November goal.

Former group operations director for China, Doug Ostermann was appointed earlier this month to replace Natalie Knight, who left the company in the wake of deteriorating results.

The problems specific to Stellantis add to the difficulties faced by all Western manufacturers: a slowdown in the market, particularly for electric vehicles, the delicate management of the exit from thermal power and increased competition from Chinese manufacturers outside their borders. .

The leading European car manufacturer, Volkswagen plans to close at least three factories in Germany and lay off tens of thousands of people, the head of the group’s works council said this week, which would constitute an even more drastic restructuring than envisaged. initially.

NEW OBJECTIVES CONFIRMED

Stellantis maintained its objectives, revised sharply in September due in particular to operational and commercial difficulties in the United States, i.e. a current operating margin of between 5.5% and 7.0%, compared to a targeted “double-digit” margin. previously. Its industrial free cash flow is expected between -5 billion and -10 billion euros, whereas it previously anticipated a “positive” industrial free cash flow.

Until now one of the most profitable groups in the sector, Stellantis saw its adjusted operating profit fall by 40% in the first half. It also hinted that its dividend and share buybacks could be reduced in 2025.

The automobile manufacturer born from the merger between PSA and FCA achieved a turnover of 33 billion euros over the past quarter. Analysts were expecting 31.1 billion euros, according to a consensus calculated by Reuters after October 16, the date Stellantis published for the first time a preliminary estimate of its volume deliveries for the quarter.

These ultimately fell by 21% to 1.17 million vehicles, mainly due to holes in the range’s product offering, underlined the financial director. These, whose negative effect on sales comes in addition to destocking, should begin to be filled over the course of the vast renewal undertaken by Stellantis.

The group will have launched no less than 20 new models throughout 2024, including the new Peugeot 3008, the electric Citroën C3, the Alfa Romeo Junior, the Dodge Charger Daytona and the Jeep Wagoneer S.

At the end of September, total inventories reached 1.33 million vehicles, down 129,000 year-on-year. In the American market alone, dealer inventories fell by 80,000 units – 50,000 in the third quarter and 30,000 in October.

Citi analysts welcomed this improvement cautiously, seeing “little upside potential (…) despite the year’s strong underperformance.” They expect a continuation of pressure on prices, which weighed on Europe in the third quarter, a strengthening of Chinese competition and add the headache of the tightening of European CO2 standards in 2025 for lack of volume. if demand for electricity does not restart.

In another statement, Stellantis highlighted that year-to-date, it was still on the podium in several European countries – number one in France and Italy and in the top 3 in Germany, Spain and the United Kingdom. He also recalled that its market share in the United States had recovered in September, to 8% compared to 7.2% in July.

“While Q3 2024 performance falls below our potential, I am pleased with our progress in resolving operational issues,” added Doug Ostermann.

“We have full confidence in the ability of our activities to perform well over time. We see this as a set of very transitory, temporary, operational challenges that we are well on our way to correcting.”

(Reporting by Gilles Guillaume and Giulio Piovaccari, edited by Kate Entringer and Sophie Louet)

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