MILAN (Reuters) -Stellantis warned on Thursday of a “turbulent” year ahead as its operating profit fell 10% in the second half, when strikes at the ‘Detroit Three’ automakers caused long stoppages at its operations in North America, its profit powerhouse.
Union strikes in North America added to a complicated outlook for global carmakers, with still timid global demand for electric vehicles, increasing Chinese competition, sustained costs and fallouts from geopolitical tensions.
Unions’ coordinated six-week strikes in the United States and Canada ended with agreements for record salary increases for workers at the Detroit Three automakers.
Operating profit (EBIT) at the world’s third largest automaker by revenues fell to 10.2 billion euros ($10.96 trillion) in the July-December period. That topped analysts expectations of 9.54 billion euros, according to a Reuters poll.
For this year, Stellantis stood by its forecast for double-digit margins on adjusted operating profit and positive industrial free cash flow, even as the carmaker faces higher labour costs in North America. It has given the same outlook for the past two years.
“This is our minimum commitment every year, there is lots of head and tailwinds in this number, but something we remain very committed to that outlook,” CFO Natalie Knight told reporters.
Knight said that impact for Stellantis of the strikes, in terms of higher costs per car produced, would be similar to those booked by competitors, but at an overall level Stellantis could rely on strong pricing power in North America.
“So the impact for us is certainly going to be on an overall level lower than what you’ve seen from our peers,” she said.
Stellantis rivals Ford and General Motors, the other “Detroit’s three’, have both cut their profit forecasts for last year due to lost production from long strikes at their North American plants.
Ford has said the new labour agreements in North America would cost it $8.8 billion euros in the long tem, or $900 in extra costs per vehicle by 2028. For GM higher labour costs form deals with the UAW and Unifor unions would amount to $9.3 billion through 2028.
Knight did not provide figures about estimated higher costs for this year and the following ones.
“It certainly will be less of an overall headwind than the impact that we saw in 2023. But it is something that will be sizable for us when we look at 2024,” she said.
Stellantis said it would propose a 1.55 euro per share dividend, up about 16% from a year earlier, and that it would run during 2024 a share buy back programme worth 3 billion euros.
($1 = 0.9321 euros)
(Reporting by Giulio Piovaccari and Gilles Guillaume;Editing by Josephine Mason and Kim Coghill)
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