A Stellantis sign is seen outside FCA headquarters and technology center in Auburn Hills, Michigan, on January 19, 2021.
Jeff Kowalski | Afp | getty images
Shares of European automakers fell sharply on Monday after Stellantis and British luxury brand Aston Martin issued profit warnings, citing broader industry challenges and difficulties in China, the world’s largest auto market.
Stellantis on Monday lowered its 2024 full-year guidance due to worsening “global industry dynamics” and increased competition from China, sending its Milan-listed shares lower at the time of disclosure.
The French-Italian conglomerate, known for brands including Chrysler, Dodge, Jeep and Maserati, warned that sales in the second half of the year would be lower than expected “in most regions.” It has now lowered its adjusted operating profit (AOI) margin for full-year 2024 to between 5.5% and 7.0% from its “double-digit” forecast.
“The deterioration of the global industrial environment reflects a lower market outlook for 2024 compared to the beginning of the period, while competitive dynamics have intensified due to increased industrial supply and intensifying competition from China,” the automaker said.
It also lowered its forecast for industry free cash flow to a range of between minus 5 billion euros ($5.58 billion) and negative 10 billion euros, down from its previous “positive” guidance, due to lower expected AOI margins and temporarily higher working capital. Lowered it. During the second half of this year.
The automaker further described the guidance revisions as “a decision to significantly expand remedial actions for North American performance issues,” but did not provide additional details. Earlier this year, Stellantis was sued by U.S. shareholders who claimed it defrauded the company by concealing growing inventory and other items, Reuters reported.
Stellantis’ U.S. dealer network this month criticized CEO Carlos Tavares for decisions it said were detrimental to the automaker’s business, including the company’s recent decline in sales and factory production cuts.
Shares of the European automaker closed down 14.7% on Monday. Shares on the New York Stock Exchange fell 12.5% to $14.05 on Monday, hitting a new 52-week low.
Aston Martin, the British luxury carmaker behind the iconic models that gained fame from their appearances in the James Bond film franchise, also said it would cut profit margins and production targets this year.
Expecting 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) to now be lower than the previous year, it announced a cut of about 1,000 units in response to “supply chain disruptions and continued macroeconomic weakness in China.” Performance.
The company said it no longer expects to achieve positive free cash flow in the second half of the year and expects its full-year gross margin to fall below 40% compared to its previous target of that threshold.
Aston Martin said it was “addressing supply chain issues and continues to recognize the significant market opportunity that China represents as the macroeconomic environment improves.”
The company’s shares closed down 24.5% on Monday, its worst one-day decline since March 2020, according to LSEG data.
Stellantis and Aston Martin’s profit warnings come just days after German automaker Volkswagen cut its full-year sales outlook again on Friday, now forecasting 2024 operating margins on sales from a previous range of 6.5 to 7.0 percent. We are guiding it to 5.6%.
A stock exchange filing translated by Google lowered the outlook due to delays in the development of its passenger car and commercial vehicle brands and “the deteriorating macroeconomic environment creates additional risks, especially for the core brand group.”
European automakers are struggling to maintain their presence in China, and China’s own automakers are now aiming to expand electric vehicle sales in Europe. ING analysts warned earlier this month that the widespread shift to EVs “is putting European automakers under increasing pressure, with total new vehicle sales in their domestic markets failing to return to pre-pandemic levels.”
Volkswagen shares fell about 2% as the London market closed.
