(News Bulletin 247) – The car manufacturer has published its third quarter turnover. But the publication is not surprising enough to prevent the title from taking profits and contains some elements which raise questions.

In the midst of an attempt at stock market redemption, Stellantis fell again this Thursday, October 30.

The car manufacturer born from the merger between Peugeot SA and Fiat Chrysler Automobiles (FCA) in 2021 dropped 9.7% around 3:50 p.m., accusing the biggest decline in the CAC 40.

The Italian-American-French group delivered its third quarter revenues, a publication on which there was little suspense, Stellantis having already published its volumes for the same period.

The company’s management then did not provide enough information in the afternoon to convince analysts and investors who remained unsatisfied.

The group also flagged “changes” in its strategy that will result in accounting impacts in the second half that could affect net profit and cash generation.

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Profit taking

Ultimately, turnover reached 37.2 billion euros, up 13% over one year, against a consensus (the average forecast of analysts), placed at 36.82 billion euros.

Remember that the basis of comparison was at the bottom of the daisies. In the fourth quarter of 2024, the manufacturer saw its revenues plunge by 27% because the company had taken drastic measures to reduce its inventories in the United States, an issue that the group took seriously too late and which had weighed down its profitability.

The increase in turnover is in line with that of billings, which also increased by 13% over the quarter.

Stellantis has confirmed its objectives which remain quite vague. The group intends to generate higher turnover, current operating income (or adjusted operating income) and cash flow in the second half of 2025 compared to the first.

On the current operating margin, the company specifies to expect a “low single digit” rate (between 1% and 4%).

“Although supported by very favorable comparisons, the rebound in Stellantis revenues remains encouraging, marking the first increase since the third quarter of 2023 and suggesting a potential recovery which is taking shape,” appreciates Oddo BHF.

However, the research office believes that visibility on this recovery “is still too limited”.

“The group will now need to confirm an improving trend in the fourth quarter, particularly in the United States, where key launches are now available at dealerships, and, more importantly, demonstrate that this recovery translates into operational and financial performance, despite persistent headwinds (customs duties, exchange rates, competition, etc.),” the broker continues.

“The stock may suffer from profit-taking. The stock had gained 20% over a month before this publication, and this progression was, in my opinion, not justified,” explains Adrien Brasey, analyst at the independent research firm Alphavalue.

“Stellantis had, of course, posted increased sales in the United States in the third quarter. But this increase was mainly due to a favorable basis of comparison and an effect of anticipation of sales of electric and plug-in hybrid vehicles in order to take advantage of the federal tax credit of 7,500 dollars before the expiration of the program, which could have artificially inflated the figures. The data indicates that the group had not really regained significant market share against GM and Ford.”, he elaborates.

Accounting adjustments

Furthermore, the analyst notes that, in the commentary on its outlook, Stellantis indicates that it intends to make “significant and necessary changes to our strategic and product plans, to respond to regulatory, geopolitical, macroeconomic developments, as well as other external and internal developments”.

The group specifies that these “changes” will result in additional charges which, once finalized, “should be largely excluded from the adjusted operating profit”.

“These indications worry me somewhat. In the past, Stellantis has often published a high adjusted operating profit. However, this indicator sometimes included a large number of restatements which, over time, became structural and no longer exceptional. Thus, the real margins of the company were in reality much lower”, explains Adrien Basey.

“The fact that the group indicates that these future ‘changes’ will be excluded from the adjusted operating result therefore encourages me to be vigilant and could also weigh on market sentiment. These adjustments will weigh on the net result, which could have an impact on the dividend. In addition, the guidance (the outlook, Editor’s note) remains relatively vague and these restatements could also weigh on cash generation”, concludes the financial intermediary.

Management does not reassure

The conference call held by the new general director, Antonio Filosa, did little to reassure the market. On the contrary, the stock increased its losses in the afternoon.

“Management has given very few details on the expected recovery, we are no further ahead than yesterday. There is therefore uncertainty over the fact that the recovery in volumes will be reflected in the results,” regrets an analyst. “They really gave few marbles,” he adds.

Antonio Filosa, for example, refused to commit to a return to profitability in North America in the second half.

However, this region is crucial for the company (the group previously posted a current operating margin of more than 16%) and Stellantis expects a strong increase in volumes there in the coming months. But Antonio Filosa recalled that the company did not give perspectives by region.

The manager, on the other hand, affirmed that the group was focused on the deployment of its strategy which should enable it to improve “sequentially”, each quarter, all of its performance indicators.

With this in mind, Antonio Filosa judged that a current operating margin of 6 to 8% for the group was “reasonable” in the medium and long term. A speech that contrasts with that of his predecessor, Carlos Tavares, who guaranteed profitability of more than 10%.