#Stellantis #ProfitWarning #AutoIndustry
Stellantis Issues Profit Warning, Shares Plummet
Stellantis, the parent company of iconic brands such as Dodge, Chrysler, Jeep, and Maserati, has issued a significant profit warning that has sent its shares tumbling. On Monday, the Franco-Italian automaker revised its annual guidance for 2024, citing deteriorating global industry dynamics and heightened competition from Chinese manufacturers.
Revised Financial Projections
Stellantis now expects its adjusted operating income (AOI) margin for the full year of 2024 to be between 5.5% and 7.0%, a stark drop from its previous double-digit expectations. This adjustment reflects lower-than-anticipated sales across most territories in the second half of the year.
Impact on Shares and Financials
The profit warning led to a sharp decline in Stellantis' shares, with Milan-listed stocks dropping by 10% at the market's opening. This downturn is compounded by a revised forecast for industrial free cash flow, which is now expected to be between negative €5 billion and negative €10 billion, a significant shift from the previous positive guidance. The reduced AOI margin and temporarily elevated working capital requirements in the second half of the year are key factors driving this change.
Broader Industry Context
Stellantis is not alone in its financial struggles. German carmaker Volkswagen recently downgraded its own annual forecast, projecting an operating return on sales of 5% for 2024, down from an earlier range of 6.5% to 7.0%. Volkswagen's revised projections are attributed to slow progress in its passenger car and commercial vehicle divisions, as well as a deteriorating macroeconomic landscape.
Market Reactions
The European markets are feeling the ripple effects of these announcements. The FTSE index in the U.K. is expected to open lower, while Germany’s DAX and France's CAC 40 are also forecasted to decline. This subdued start to the week follows a recent all-time high for the pan-European Stoxx 600 index, which was buoyed by China's economic stimulus initiatives.
Global Economic Indicators
In the Asia-Pacific region, China's official purchasing managers' index for September showed a contraction in the manufacturing sector for the fifth consecutive month, despite slightly exceeding economists' expectations. In contrast, Japan's industrial output declined sharply by 4.9% year-on-year in August, highlighting the varied economic challenges faced by different regions.
Conclusion
The profit warning from Stellantis underscores the challenging environment faced by major automakers, marked by intense competition and adverse global industry dynamics. As investors and analysts closely watch these developments, it is clear that the automotive sector is navigating through a period of significant uncertainty and adjustment.
Original Article: [https://www.cnbc.com/2024/09/30/dodge-maker-stellantis-drops-profit-warning.html]
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