Stelantis NV reported an increase in annual profit and issued an upbeat forecast, a sign that the global auto industry has returned to strength after nearly two years of disruptions linked to the pandemic.
The maker of the Jeep and Dodge brands said it expects industry sales to increase 3% this year in both North America and Europe. Additionally, Stelantis said it was aiming for double-digit adjusted operating income margins—the preferred measure of profit—as well as positive free cash flow in 2022. The company said that its forecast assumes economic and the COVID-19 situation remains largely unchanged. Stelantis shares rose more than 5 per cent in early trade.
The automaker, formed by combining Fiat Chrysler and Peugeot maker PSA Group, reported 2021 net income of €13.22 billion, which equates to about $15 billion – a threefold increase driven by North America, where the carmaker reported record margins. Gave. Despite severe production cuts from continued computer-chip shortages, total revenue rose 14% last year to €152 billion.
Like rivals, Stelantis’ profit margins have been boosted by increased new vehicle prices and thinner selection at dealership lots, partly due to semiconductor shortages that have caused them to decrease production. Car companies sharply cut back on the discounts and other financial incentives they typically offer to compete for buyers’ attention.
At Stelantis, the semiconductor shortage resulted in the company’s planned production cuts of about 1.7 million vehicles last year, or 20%. The company’s head of finance, Richard Palmer, said the issue was mitigated in the fourth quarter and he expected it to continue into 2022, but it was difficult to predict accurately.
“I obviously have very little visibility,” he said.
At the same time, Mr. Palmer said the company is tackling inflation on raw materials such as steel, aluminum, copper, rubber, plastics and others. The company will continue to offset those rising prices with cost-cutting efforts and price increases, he said.
CEO Carlos Tavares will next week present the group’s business plan for 2030, a little more than a year after the merger is completed.
Stelantis said on Wednesday that it achieved €3.2 billion in net cash profit from the merger, placing it ahead of schedule.
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