Stellantis rakes in a huge profit

(Paris) Stellantis recorded huge profits in 2021 for its first year of existence by multiplying synergies and increasing its prices, despite sales being hampered by the shortage of electronic chips.

The automotive group, born from the merger in January 2021 of French manufacturers Peugeot-Citroën (PSA) and Italian-American Fiat Chrysler (FCA), published on Wednesday a net profit of 13.4 billion euros (19.3 billion CAN ) in 2021, almost tripled compared to the difficult year 2020, the group said during a press conference.

This profit climbs to 14.3 billion euros (20.6 billion CAN) with the dilution of its shares in the equipment supplier Faurecia.

“Today’s record results demonstrate that Stellantis is well positioned to deliver strong performance even in the most uncertain market environments,” said Group Chief Executive Carlos Tavares.

The market welcomed the publication so that the action of Stellantis jumped 4.57% around 5 p.m. on the Paris Stock Exchange, to 17.08 euros.

With 6.14 million cars sold in 2021, the manufacturer was deprived of 1.6 million vehicles by the shortage of electronic chips. But it recorded a turnover of 152 billion euros (218.8 billion CAN), up 14% compared to the combined data of the two groups in 2020.

These rare results in the sector, with an operating margin of 11.8% against 10% expected, were the result of synergies and cost-hunting within the group, but also of rising selling prices on vehicles.

Absorb the costs

An electric car costs 40 to 50% more to produce, so Stellantis must absolutely gain 10% in productivity per year by 2026, hammered Mr. Tavares. “We cannot transfer all these costs to consumers, we risk losing the middle classes. We have to absorb 50% of it, ”said Mr. Tavares.

The manufacturer is notably in the process of overhauling its distribution network, but its equipment manufacturers will also have to contribute: this challenge will cause a “Darwinian transition” among these subcontractors, warned the leader of Stellantis. It is also a priority to keep a “very low” balance point for the group, in case the automotive market does not return to its pre-crisis volumes.

In Europe, Stellantis’ main market, sales fell but turnover increased by 5%, thanks in particular to hybrid and electric cars. In North America, the group’s margins were boosted by limited supply and very strong demand, particularly for its Jeep SUVs and Ram pickups.

As for the other brands, Peugeot saw its sales rebound slightly in Europe, in particular thanks to its hybrids, and its small 208 remains the best-selling car on the continent. Fiat has again become No. 1 in Latin America and is preparing its 100% electric transition for 2027 in Europe.

Maserati returned to profit in 2021, while Alfa Romeo is due to relaunch in 2022 with a new SUV, its first hybrid.

Rebound in 2022

The board of directors of Stellantis will propose the payment of a dividend of 1.05 euro per share, or 3.3 billion euros (4.8 billion CAN). 1.9 billion euros (2.7 billion CAN) will also be redistributed to its 300,000 employees worldwide (+70% over one year).

FO, the manufacturer’s first union in France, was “delighted with the results announced by the group and the profit-sharing which will be on average this year at 4,300 euros” for each employee in France. “It is the result of the gavage of public aid and thousands of dismissals of temporary workers and job cuts from permanent contracts”, denounced on the contrary the central union representative CGT Jean-Pierre Mercier.

In addition to the shortages of semiconductors, the group had to face in 2021 the inflation of the prices of raw materials (steel, aluminum, copper, plastics). The shortage of chips should ease from the second half of the year, but the situation remains unclear as to other logistical problems.

Stellantis thus remains cautious for 2022 and forecasts a slight rebound in the global automotive market, but aims to maintain a “double-digit” operating margin. Carlos Tavares must specify the 1^er March its strategic orientations for the group, with in particular its projects for China.