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AUTOMOTIVE: Stellantis (STLA Baa1/BBB+/BBB+[P]): CFO Comments

AUTOMOTIVE
BulletCredit Bullets

Credit negative, risk of a profit warning.

  • Headlines coming across regarding comments made at a sell side conference.
  • It’s targeting 100k units inventory reduction in NA by year end, which is a “top priority”. That would be consistent with 42k reduction achieved in the last two months, with seasonally weaker sales in 4Q. We estimate 100k is roughly a quarter of local inventory. While necessary, discounting will be a drag on margins. The 10% FY24 operating margin target is described as “ambitious”, which may signal a profit warning ahead.
  • Stellantis has been under pressure from analysts and recently its dealer network due to high inventory levels. Dealers have called for discounting, which the company appears to be addressing now.
  • Delays on European EVs due to software issues and potential job cuts were also mentioned.
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Credit negative, risk of a profit warning.

  • Headlines coming across regarding comments made at a sell side conference.
  • It’s targeting 100k units inventory reduction in NA by year end, which is a “top priority”. That would be consistent with 42k reduction achieved in the last two months, with seasonally weaker sales in 4Q. We estimate 100k is roughly a quarter of local inventory. While necessary, discounting will be a drag on margins. The 10% FY24 operating margin target is described as “ambitious”, which may signal a profit warning ahead.
  • Stellantis has been under pressure from analysts and recently its dealer network due to high inventory levels. Dealers have called for discounting, which the company appears to be addressing now.
  • Delays on European EVs due to software issues and potential job cuts were also mentioned.