Stellantis raises profit prediction

Stellantis has increased its 2021 profit margin target after beating first-half earnings forecasts and making about €1.3 billion (NZ$2.2b) in merger-related net cash savings over the same period. 

The world’s fourth largest carmaker, which was formed in January 2021 from the merger of PSA and Fiat Chrysler (FCA), says higher prices and cost savings were boosting profitability.

Stellantis is now aiming for an adjusted operating profit margin of about 10 per cent this year, compared with a previous range of 5.5 to 7.5 per cent.

The company, whose brands include Citroen, Peugeot, Jeep and Maserati, has a long-term goal of €5 billion in annual savings and hopes to achieve 80 per cent of them by 2024.

The new margin forecast assumes no further deterioration in the global semiconductor shortage that has been hurting the industry, and no further Covid-19 lockdowns in key markets such as Europe and the US. 

Stellantis expects to lose about 1.4 million vehicles from its production levels in 2021 because of a lack of semiconductors, reports Reuters.

Carlos Tavares, chief executive officer, predicts there will be some improvement in chip supply in the fourth quarter after difficulties in the current three-month period.

In the first half of this year, Stellantis’ pro-forma adjusted earnings before interest and tax (EBIT) were €8.6b, with an EBIT margin of 11.4 per cent.

Another highlight from the financial results was Maserati being back in the black with first-half adjusted operating income of €29m after two years in the red.

Tavares adds the company is also going “full speed ahead” with its electrification plans and will launch of 11 battery electric vehicles and 10 plug-in hybrids over the next 24 months.