(BFM Stock Exchange) – The car manufacturer saw its profitability fall last year, even falling zero on the second half. But it is above all the lower objectives of the expectations that intrigue. And which are based on the hypothesis of successful launches and market share.

John Elkann did not go there by four paths. “2024 is a year of which we are not proud,” said the chairman of the board of directors of Stellantis and current driver of the group on Wednesday, while waiting for a successor to Carlos Tavares is found at the Directorate General of the Company.

It is an understatement to say that Stellantis suffered last year. For many years, the group resulting from the merger between Peugeot SA and Fiat Chrysler in 2021 has been showing stratospheric profitability, to make the German premium brands pale. In particular in North America, where its current operating margin exceeded 15% in 2022 and more than 16% in 2023.

Las, these profitability levels are now “chimeras”, underlines Bernstein. The current operating margin of Stellantis dropped to 5.5% against 12.8% in 2023. This rate even fell to zero on the second part of the year and switched to bright red (-6.8%) in North America over the same period. The benefit of 2024 plunged 70% and Stellantis burned over the year more than 6 billion euros in cash.

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These results in free fall and moreover lower than expectations (at the margin) are not such a big surprise. “The more pronounced weakness of the second half of 2024 had been widely pointed out – the management clearly indicating that it wishes to start 2025 on healthier bases – and must therefore not be overly printed”, underlines Oddo BHF.

Doug Ostermann, the financial director of Stellantis, had previously indicated that Stellantis could very well take actions bringing the 2024 margin at the bottom of his objective (that is to say 5.5% precisely) if this made it possible to better prepare 2025.

As such, Stellantis has managed to reduce his stocks more than it was planning, especially in the United States. The company therefore assaulted the situation on the commercial level. However, what was done at promotional prices, reduction in prices, and lower production in the second half.

A bad memory

Despite these appreciable efforts, the 2025 objectives of Stellantis prove to be not very engaging and augurs for a year still difficult for the manufacturer. The fall in the action of almost 4% on Wednesday has more likely to do with these prospects than with the 2024 results per se.

For the current year, Stellantis is counting on increasing revenues, a common operating margin called “Mid single Digit”, which can be roughly translated by “around 5%”, and a positive cash flow over the whole year.

According to Oddo BHF, the market has something to be disappointed since consensus was 6.4%. The broker evokes “more prudent than expected” perspectives which imply “possibly no improvement in 2025 or even a decline” of profitability.

“This result is in line with our expectations, but could somewhat disappoint certain investors who have referred to the previous comments of the financial director according to which the current operating profit is up from one year to the next,” abounds UBS.

The details of the trajectory can also question. Stellantis expects his income and operating margin to be much higher in the second half than in the first. Doug Ostermann told analysts plan a “Low Single Digit” margin, between 1% and 4% over the first six months of the year, especially in North America, before an acceleration on the second part of 2025.

The financial director explained that the company expected to benefit much more from its new launches in Europe (especially in the C) as in the United States (especially at Jeep), which will create more volumes, as well as a better rate of use of its factories.

Admittedly, the context is different. But these indications greatly recall the guidelines that the previous financial director, Natalie Knight, in June 2024 had greatly given, in June 2024. The manager, who has since left the company, anticipated an improvement in the operational margin in the second half of 2024, thanks in particular to the launching of vehicles. However, as mentioned above, it is quite the opposite that occurred.

Regain market share, the big issue

On the cash generation, Doug Ostermann said that Stellantis expected the positive flow of the second half. This means that, on the first part of the year, the company does not exclude burning cash. Here again this indication can disappoint, notes Bernstein, because the market expected that part of the cash consumption of the second half of 2024 (-5.6 billion euros) “overturned” in the first half of 2025.

In addition, Bernstein also notes an interesting point: the prospects of Stellantis for 2025 assume that the current environment on customs duties is maintained.

This is a challenge when you know that the Trump administration is considering important customs surcharge on imports from Canada and Mexico. According to Stifel estimates, 16 billion euros in Stellantis revenue is exposed to these customs duties.

Asked about the impact of customs duties, at the conference with analysts, John Elkann judged that he was premature to express himself on this question ensuring, however, that Stellantis had “several scenarios in the lead”.

In this context, the reconquest of Stellantis market shares is imperative. Philippe Houchois, analyst at Jefferies, pointed out to management that the group had lost 5 market points in Europe as in the United States since its creation (2021). The analyst argued that the company’s market shares “were still quite awful” while investors need to see these market shares rebound on the individual’s segment. “This is critical for market confidence,” said the analyst.

John Elkann posted his confidence on the subject, in particular due to the repositioning of the company in terms of price, more in line with the market. “We see good signs” especially in January “in the United States” as well as in certain European markets (Italy, France), he added. In this purpose, the company intends to give more latitude to local teams to be “closer to the customer,” he added.

But will these more affordable prices and will the innovations be enough to regain market share, while the market is very competitive in Europe, as the company has recognized, and that it should be sluggish (stable) in the United States, as Bernstein pointed out?

In any case, the next leader of Stellantis will have work to do. The company said its next managing director would be appointed by the end of June. John Elkann assured that the group had received “excellent candidates both internally and external”.

Oddo BHF also believes that it will be necessary to look later if the 2025 Stellantis perspectives have not integrated a supplement of caution, upstream of the designation of this new pilot. In the immediate future “we are reinforced in the idea that there is no need to rush into this story (stock market) for the moment,” concludes the broker in a note published on Wednesday morning.

And, for the moment, Stellantis suffers from comparison with his rivals. Its operational margin is now significantly lower than Renault. The group also divided by two its annual dividend. On Wednesday, General Motors decided, on the contrary, decided to fall under 25% his quarterly coupon while accompanying it with a program of action buybacks of $ 6 billion …