Stellantis, the multinational automotive corporation with brands including Fiat, Peugeot, Jeep, and Ram, has recently addressed the impact of coordinated strikes in North America led by the United Auto Workers (UAW). The strikes, which have been ongoing for the past six weeks, primarily aimed to secure pay increases for auto industry workers in the United States and Canada. Stellantis’s response to these strikes stands out, with the company asserting that the industrial action will have a relatively minor effect on its overall financial performance when compared to its Detroit Three counterparts, Ford and General Motors.
The strikes reached a significant milestone with the recent announcement of tentative agreements, which included substantial salary increases for workers at all three major American automakers. However, Stellantis made it clear that these developments would not deter the company from achieving its financial targets for profitability and cash flow. According to the Chief Financial Officer of Stellantis, Natalie Knight, the strikes are expected to cost the company less than 750 million euros (approximately $800 million) in terms of profitability. This comes after a negative revenue impact of around 3 billion euros. Despite these challenges, the company confirmed its full-year forecast, which includes achieving a double-digit margin on adjusted operating profit and maintaining positive industrial free cash flow.
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Natalie Knight, who took on the role of Chief Financial Officer during the summer, emphasized that Stellantis’s 750 million euro profitability hit would be the smallest among the Detroit Three automakers. In contrast, Ford expects the strikes to reduce its 2023 adjusted operating profit by about $1.3 billion, while GM anticipates an impact of no less than $1 billion. Stellantis remains proactive in its approach, examining various mitigation strategies to address the consequences of the strikes.
The market reacted positively to Stellantis’s response, with shares in the company rising by 2.2% during trading hours, outperforming Italy’s blue-chip index. Furthermore, Stellantis reported a significant improvement in its supply chain situation, with the group’s inventory more than doubling in the first nine months of the year. This enhanced inventory situation has allowed Stellantis to better respond to recent work stoppages.
In terms of financial performance, Stellantis reported a 7% increase in third-quarter revenue, reaching 45.1 billion euros, thanks to improved volumes and consistent pricing. This exceeded the expectations of analysts polled by Reuters, who had predicted revenue of 43.7 billion euros.
Source: Reuters
