Stellantis posted better-than-expected earnings in the first half as supply-chain problems eased and higher shipments helped to lift profits.
The automaker's first-half margin on adjusted EBIT slipped to 14.4 percent from 14.5 percent a year earlier, beating the 12.2 percent predicted by analysts.
Adjusted earnings before interest and tax (EBIT) were 14.1 billion euros ($15.6 billion).
New CFO Natalie Knight, who took the job this month, said pricing power was still the main driver for the results of the group, whose brands include Fiat, Peugeot, Alfa Romeo, Ram and Jeep.
"We did a variety of price increases and the group has been outstanding at holding on to those, and also looking at where additional pricing was appropriate in the first half," she said on Wednesday during an earnings call with analysts.
Margins up in Europe, down in N.A.
Adjusted EBIT margin in Europe was 10.7 percent in the first half, a slight increase over 2022 when it was 10.3 percent.
North America margin was 17.5 percent, compared with 18.1 percent in 2022.
North Africa and the Middle East margin grew to 25.9 percent from 17.4 percent; South America margin was 14.2 percent, versus 13.9 percent in 2022.
CEO Carlos Tavares said Stellantis's margin performance was better than those of Tesla and General Motors, which he said posted margins of 10.5 percent and 8.3 percent respectively.
But he said Stellantis will have to accelerate a cost cutting to keep profitability strong in a more challenging pricing environment.
Tavares said a key driver of the first-half result has been cost cuts at Stellantis plants, and he plans to engage "more intensively" with suppliers for further reductions.
He has previously said Stellantis may need to further adapt its industrial footprint in the U.S., its biggest profit pool, and Europe as a consequence of the expensive shift to EVs.
Automakers are under growing pressure as they race to electrify their fleets amid concerns about softening demand across the globe. At the same time, Stellantis and others are finding it harder to maintain the high prices that underpinned profits in recent years as less expensive Chinese EVs become more available.
Stellantis, which is investing 30 billion euros into EVs and software, is under pressure from the French and Italian governments to produce cheaper cars locally to maintain jobs in those markets.
The automaker's first-half shipments were 1.48 million vehicles, compared with 1.36 million in the first half of 2022, as logistics difficulties eased.
Order backlogs
Tavares said the automaker has been able to work down backlogs of orders as shortages of critical semiconductors have let up and some logistics problems were mostly resolved after having left thousands of cars stranded in European parking lots.
"We still have a couple of things that we are going to solve during the month of August, namely getting rid of our backlog in some of our yards where our customers are still waiting" for some cars, Tavares said.
“Logistics issues are 95 percent solved” although France remained a problem, he said.
Stellantis confirmed its full-year outlook for a double-digit margin, positive cash flows and the pace of its share buyback program. The carmaker said it sees demand this year across Europe, the Middle East and Africa to be stronger than previously expected.
Equita's analyst Martino De Ambroggi said that Stellantis's strong first-half results, including for cash generation, would support an improvement of his forecasts for the group's full-year results, despite an expected pricing power reduction.
Reuters and Bloomberg contributed to this report
