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 [10] - Net revenue fell by 13% to €74 billion, impacted by adverse regional mix and lower pricing [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 [15] - In North America, performance was affected by tariffs and lower fleet performance, while Europe saw a 13% decline in LCV volumes [16] - South America maintained market share leadership, with industry growth in Brazil and Argentina [16] Market Data and Key Metrics Changes - North America and Europe are experiencing a recovery, with North America showing a 90% year-over-year improvement in order books [34] - European market share increased to 17%, up 1.3 percentage points from H2 2024, with significant growth in BEV and hybrid vehicle sales [35][36] Company Strategy and Development Direction - The company is focusing on growth, execution, and profitability, with a lineup of new vehicles and powertrains [24] - Key actions include launching new products, improving inventory discipline, and reestablishing financial guidance for the second half of 2025 [19][20] - The leadership team is committed to making tough decisions to accelerate business recovery [20] Management's Comments on Operating Environment and Future Outlook - The first half of 2025 was challenging, but there are signs of improvement, with expectations for gradual sequential acceleration in the second half [19][40] - The company is addressing past mistakes by reintroducing successful nameplates and adjusting product strategies to meet customer demand [73] Other Important Information - Industrial liquidity at the end of H1 was €47 billion, with €31 billion in cash and liquid securities [17] - The expected net tariff expense for the year is projected to be around €1.5 billion due to increased production levels [18] 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 [45] Question: Cash Flow and Balance Sheet Strength - Management acknowledged high cash burn but noted a significant reduction and expected further improvement in the second half [54] Question: Brand Portfolio Strategy - Management recognized the strength of their iconic brand portfolio and is working on better management and efficiency [60] Question: Pricing Pressure in Europe - Management indicated that market share is improving, and they expect better profit generation in H2 despite industry challenges [66] Question: Relationship with U.S. Dealers - Management reported improved dialogue with dealers, resulting in a 90% year-over-year increase in order inflow [85] Question: Guidance on Free Cash Flow - Management expressed commitment to gradual improvement in cash flow, with expectations for increased volumes and better pricing in the second half [92]