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

On Monday, auto giant Stellantis N.V. (STLA) revised its fiscal 2024 adjusted margin outlook, attributing the change to significant remediation actions addressing North American performance issues and a decline in global industry dynamics.

The company now forecasts an adjusted operating income (AOI) margin between 5.5% and 7.0%, a considerable reduction from its previous double-digit expectation. Stellantis indicated that approximately two-thirds of this margin reduction stems from corrective measures in North America. Additionally, lower than anticipated sales performance in the latter half of the year across most regions will also impact this margin.

Industrial free cash flow is now projected to range from a negative 5 billion euros to a negative 10 billion euros, in stark contrast to the previously expected positive figures.

Stellantis has expedited its planned normalization of inventory levels in the U.S., aiming for no more than 330,000 units in dealer inventory by the end of 2024, revising its prior target from the first quarter of 2025.

The company plans to reduce North American shipments by over 200,000 vehicles in the second half of 2024, surpassing the previously anticipated reduction of 100,000 vehicles. Additional measures include increased incentives on 2024 and older model year vehicles, as well as productivity improvement initiatives involving both cost and capacity adjustments.

Stellantis further noted that the deteriorating global industry landscape reflects a downgraded market forecast for 2024 compared to earlier in the year, compounded by intensified competitive dynamics due to rising industry supply and increased competition from Chinese manufacturers.

Despite these challenges, Stellantis plans to leverage and expand its competitive advantages. The company remains confident that these recovery actions will lead to stronger operational and financial performance in 2025 and beyond.