Stellantis, record profit at 18.6 billion. 3 billion buyback. But 2024 will be a 'turbulent' year

The company will also propose to the shareholders' meeting to pay a dividend of EUR 1.55 per ordinary share, an increase of around 16 per cent compared to the previous year, with an ex-dividend date of 22 April 2024, registration on 23 April 2024 and payment on 3 May 2024. This was reported by the group in the note presenting its results for the financial year 2023. In addition, in 2024 Stellantis will implement a EUR 3bn share buyback programme in the market, which includes EUR 0.5bn for shares to be allocated to share-based remuneration plans and employee share buybacks. The company intends to cancel the ordinary shares acquired through the programme with the exception of a portion of up to EUR 0.5 billion, which can be used for share-based compensation and employee share plans. The shares will be purchased during a period ending 31 December 2024 on Nyse, Euronext Milan, Euronext Paris and other multilateral trading facilities.

"We have just passed the three-year mark since the birth of Stellantis and I would like to warmly thank all the teams who, operating with high standards of excellence, are making a major contribution to our growth path, despite the adversity of the moment. The record results announced today are proof that we have become a new global leader in the industry and that we will continue to be solid in the run-up to a turbulent 2024." This is how Carlos Tavares, CEO of Stellantis, commented on the 2023 results. "Thanks to the flexibility of our technologies and the roadmap established in terms of product, we are ready to face the various scenarios that may arise, continuing to realise the goals of the Dare Forward 2030 strategic plan," he added.

During the call with analysts the CEO of the world's fourth largest manufacturer by sales explained that the group now has to work on regaining market share: 'Sales are profitable, but not as profitable as we would like. It is important that we protect our market share, return to previous levels, but still protect our profitability. Our mission is to reduce costs as quickly as possible to absorb the additional costs of electrification and to sell electric vehicles at the same price as combustion engine cars, because the Chinese know how to do that'.

And Italy? In Italy 'we want to do more, because we love Italy and our Italian workers'. Tavares recalled how Italy 'is the only country that has investments on two platforms, Stla Medium and Stla Large. And by this I mean that any speculation that we do not use all the capacity we have in Italy is unfounded'. Moreover, he concludes, 'if Italy and Turin want to win' this does not mean that in Stellantis 'there must be someone else who loses'.

Tavares also spoke about Pomigliano and Mirafiori. To reach the goal of one million cars produced in Italy by 2030, agreed the government (whose new incentives), 'we need all our plants. This means, of course, that there is a future for Pomigliano and Mirafiori'. In particular, the Stellantis factory in Pomigliano 'is in a situation of full production at the moment, there is a very solid level of activity. And the reason is very simple: we want more Pandas, we can sell many more. The activity in Pomigliano is very solid'. Pomigliano and Mirafiori 'are in very different positions, impacted by different situations. In Pomigliano we also make the Alfa Romeo Tonale, which is a great success and is exported to the US, and we also export the Dodge Hornett to the US,' said Tavares.

Stellantis plans to launch 18 more full electric vehicles in 2024, making a total of 48 models available by the end of the year. The price of the new Citroën ë-C3 starts at €23,300 and is the most competitively priced B-segment EV produced in Europe. In addition, the Jeep Avenger, awarded as European Car of the Year 2023, continues to take top honours. With the Peugeot E-3008 Stellantis launched the first of four new BEV-focused platforms, the STLA Medium platform, which features a best-in-class range of up to 700 kilometres (435 miles). The second platform, STLA Large, scheduled for launch in 2024, will have a range of 800 kilometres (500 miles) and will be equipped to exceed customer expectations. STLA Large is a highly flexible platform.

Designed for BEVs and capable of adopting various propulsion systems, including hybrid and internal combustion, it will serve as the basis for the next global vehicles in the D and E segments. Stellantis secured the supply of raw materials until 2027 and signed an agreement with CATL for the supply of LFP battery cells and modules, further expanding its battery chemistry portfolio. In addition, Stellantis and Ample partnered on battery module exchange technologies to provide fully charged EV batteries in less than five minutes. Finally, Stellantis joined Symbio and other shareholders to inaugurate SymphonHy, the first gigafactory in France and Europe's largest integrated hydrogen fuel cell production site.

Stellantis has announced that it will distribute almost EUR 1.9 billion to employees worldwide this year 'in recognition of their performance and contribution to the company's financial results and achievements in 2023, both globally and locally'. The profit-sharing and variable pay programmes "not only reflect the achievements and successes of our employees, but also represent fair recognition of their commitment to working successfully as a team," the CEO commented. Since its establishment just over three years ago, the automotive manufacturer has distributed EUR 6 billion to employees worldwide (EUR 2 billion last year on 2022 results).

At a total average value of EUR 2,112, linked to the reference contractual salary, the bonus that Stellantis employees in Italy, to whom the specific collective labour agreement applies, will receive in April. This is 10 per cent more than last year's figure (EUR 1,879), but 'the 11 per cent salary increase over two years (6.5 per cent in 2023, then 4.5 per cent in January 2024) and the additional EUR 600 received by the workers as a special bonus related to the 2023 pay agreements should also be emphasised,' Tavares added. But the Pomigliano workers contested these figures. The figure would be different depending on the professional area they belong to, and, according to the Pomigliano blue suits, it is more or less the same as the one received last year. 'For 2023 production,' they explain, 'we would have expected a higher bonus. Our plant produced 215,000 cars, 33 per cent more than last year'.

Returning to the results, according to Gabriel Debach, market analyst at eToro, 'particularly noteworthy is the net industrial cash flow of EUR 12.9 billion, which is up 19% year-on-year and represents a significant strength. However, volume growth outpacing revenue growth raises questions about future challenges and price competition'.

In any case, 'the future of the company looks promising, supported by the proposed dividend, up 16%, the buyback plan of up to EUR 3 billion and solid balance sheets. As well as, of course, good model results, including the Citroën ë-C3 and the Jeep Avenger. In addition to the 25 existing electric models, 23 more will be added in 2024'. Due to macroeconomic conditions, 'the global automotive industry is facing growing inventories and overcapacity. Companies that have invested heavily in electric cars are offering substantial discounts. Carlos Tavares is nevertheless combative. He has declared that he will never sell a car without a profit. Investors appreciate this approach. It also gives rise to the fantasy that Tavares could play a leading role in further consolidation'.

A clear reference to the recent rumours about an alliance hypothesis with Renault in an anti-Chinese key, denied by the respective top managers. 'There are no negotiations underway for a major M&A operation,' said Tavares, 'and certainly not with Renault, which is a sensitive subject in Italy. That is clear. There has been speculation, but it is exactly that, speculation'.

According to Citi analysts, it is true that Stellantis executes its strategy well, but earnings and buyback expectations are high. The Jeep and Dodge manufacturer's stronger Ebit margins and free cash flow are positive elements, but the guidance, which includes double-digit adjusted Ebit margins for 2024, is 'perennially non-specific'. The EUR 3 billion buyback and the allocation of EUR 500 million for employee share plans are indicators of its strong cash position. In conclusion, although Stellantis remains a 'Oem legacy stock that is cheap, with exceptional execution, and the buyback is clearly supportive, we believe expectations for both earnings and the buyback are very high'.