Stellantis (STLA.US) Restores Profit Guidance Amid Warning of $1.44 Billion Tariff Shock in Second Half
Fundamental Intelligence APP has learned that global auto giant Stellantis (STLA.US) announced on Tuesday that, due to the new trade agreement between the EU and the US, the company will restore its financial guidance while predicting a tariff shock of approximately €12 billion (equivalent to $14.4 billion) in the second half of the year.
Stellantis stated in its declaration that it expects its adjusted operating profit rate to remain at low single-digit levels in the second half, which is a downward adjustment from its previous full-year guidance; the company also predicts that its industrial free cash flow will improve compared to the first half, when it consumed €30 billion (equivalent to $34.8 billion) in cash.
Stellantis' new CEO Antonio Filosa is facing double challenges: dealing with the automotive industry's dramatic changes and correcting the company's strategic mistakes. Trump's trade policies continue to push up costs and reshape global supply chains, while Chinese automakers such as BYD (01211) are making strong inroads into the European market.
The issue is most severe in Stellantis' traditional profit core - the North American market. In the second quarter, shipments in this region plummeted by 25%, and tariffs further pushed up operating costs, squeezing net profits. Due to rising part prices and temporary shutdowns at Canadian and Mexican factories, the group's production capacity was severely impacted in the first half, resulting in a slight increase of €280 billion in North American revenue, which was surpassed by €292 billion from European markets for the first time.
Filosa stated in his declaration: "The new management team will continue to make necessary and difficult decisions to rebuild the growth channel and significantly improve operational results."
The Milan stock exchange saw Stellantis' stock price plummet by 4.1% on that day, with a year-to-date decline of 37%.
Other data shows that, due to declines in European, North American, and Middle Eastern and African regions, the company's half-year revenue decreased by 13% compared to last year, reaching €743 billion; net losses totaled €23 billion, mainly driven by reduced investments and trade war costs, with an adjusted operating profit rate of only 0.7%. However, the South American market saw growth driven by demand in Argentina, but the company expects improvements in sales, revenue, and operating profits compared to 2024.
On the other hand, Filosa also faces challenges from overcapacity in Europe and revitalizing its brands. For example, Maserati, a luxury car manufacturer, saw shipments plummet in the first half, with a profit rate of -38%.
In a report recently issued by analysts including Michael Tyndall at HSBC Bank, it was written: "As the market stagnates, Stellantis' market share is losing even more, and cost compression will be increasingly demanding. However, management has signaled that previous reduction measures have been overdone, which poses a difficult choice for investors."
This leaves Stellantis pinning its hopes on new models such as the Jeep Wrangler hybrid and Dodge Charger Sixpack gasoline versions to revive sales. Data shows that due to production stoppages and tariff hikes, the company has already lost approximately €3 billion in US tariffs in the first half. CEO Doug Ostermann warned in early July that the tariff impact will "significantly" expand in the second half.