Stellantis Cuts Outlook For FY24 Adj. Margin, Industrial Free Cash Flow

(RTTNews) - Auto major Stellantis N.V. (STLA) on Monday trimmed its fiscal 2024 adjusted margin view, citing decisions to significantly enlarge remediation actions on North American performance issues, as well as deterioration in global industry dynamics.

For the year, adjusted operating income or AOI margin is now expected to be between 5.5% to 7.0%, down from prior double digit expectation. According to the firm, roughly two-thirds of the reduced AOI margin is driven by corrective actions in North America. Lower than expected sales performance in the second half of the year across most regions also would impact the margin.

Further, industrial free cash flow is now expected to range from negative 5 billion euros to negative 10 billion euros, compared to previously projected Positive.

Stellantis said it has accelerated its planned normalization of inventory levels in the U.S., targeting no more than 330,000 units of dealer inventory by year-end 2024, from a prior timing objective of the first quarter of 2025.

Actions include North American shipment declines of more than 200,000 vehicles in the second half of 2024, more than the 100,000 vehicles expected earlier. Further, increased incentives on 2024 and older model year vehicles, and productivity improvement initiatives that encompass both cost and capacity adjustments also would impact.

The company added that deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition.

Stellantis said it would continue to leverage and expand its competitive differentiators, and believes that the recovery actions would ensure stronger operational and financial performance in 2025 and beyond.