Stellantis(STLA) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated shipments decreased by 7% to 2,700,000 units, with declines in North America and large Europe, partially offset by growth in South America and the Middle East and Africa [9] - Net revenue fell by 13% to €74 billion, impacted by adverse regional mix and lower pricing [9][10] - Adjusted diluted earnings per share and industrial free cash flow showed improvement compared to 2024, despite an outflow of €3 billion in the first half [11][12] - AOI margin was compressed to 70 basis points, reflecting a significant increase in industrial costs [13] Business Line Data and Key Metrics Changes - North America and Europe are in turnaround phases, while South America and Middle East and Africa are delivering consistent results [16] - In North America, performance was affected by tariffs and lower fleet performance, while Europe faced a 13% decline in LCV volumes [17] - South America maintained market share leadership, with industry growth in Brazil and Argentina [17] - Middle East and Africa experienced FX headwinds but continued to show business momentum [18] Market Data and Key Metrics Changes - North America saw a significant impact from tariffs, with expectations of €1.5 billion in net tariff expenses for the year [20] - European market share increased to 17%, up 1.3 percentage points from H2 2024, driven by new product launches [39] - The company is now the second in European BEV volumes and first in hybrids [40] Company Strategy and Development Direction - The company is focused on growth, execution, and profitability, with a lineup of new vehicles and powertrains [27] - Key actions include ending unprofitable initiatives and launching products that align with customer needs [24][25] - The leadership team is committed to making tough decisions to accelerate business recovery [23] Management's Comments on Operating Environment and Future Outlook - The first half of 2025 was challenging, but there are signs of improvement and a commitment to sequential growth in the second half [7][21] - The company aims to improve AOI margins and free cash flow in the second half, with expectations of increased net revenues [21] - Management acknowledges the need for ongoing adjustments to address market challenges and improve profitability [42] Other Important Information - Industrial liquidity at the end of H1 was €47 billion, with €31 billion in cash and liquid securities [19] - The company is updating its long-term strategic plan, to be presented at the Capital Markets Day in early 2026 [45] Q&A Session Summary Question: Focus on U.S. Market and Profitability Improvement - Management emphasized growth in North America through new product launches and optimizing the mix between ICE and electrified models [50][51] Question: Cash Flow and Balance Sheet Strength - Management acknowledged high cash burn but noted a reduction in the cash burn rate and a focus on achieving positive cash flow [60][61] Question: Brand Portfolio Strategy - Management highlighted the importance of managing a diverse brand portfolio effectively and indicated that updates would be provided at the Capital Markets Day [64][66] Question: Pricing Pressure in Europe - Management noted that while pricing pressure exists, market share is improving, and new products are expected to enhance profitability [70][72] Question: Diagnosis of Profitability Decline - Management identified the phase-out of successful nameplates as a key issue and is working to restore these products to improve market share [78][79] Question: Relationship with U.S. Dealers - Management reported improved dialogue with dealers, resulting in a significant increase in order inflow [90] Question: Guidance on Free Cash Flow - Management expressed commitment to improving free cash flow in H2, despite external headwinds and tariff impacts [95][96]