Stellantis Chief Executive Carlos Tavares on Thursday left the door open to possible dividend cuts and share buybacks next year and dismissed problems with the US business that led to a big profit warning this week as a “minor operational error”.
Shares fell 4% to their lowest level since July 2022 as investors worry that rising costs to revive the U.S. carmaker’s operations will threaten its generous payouts to shareholders.
Speaking during a visit to a factory in eastern France, Tavares said the company has operational difficulties in the US, but that they will be resolved well before his contract expires in 2026.
He added that he intends to honor his contract and believes that the board shares that opinion, but that in a difficult market mistakes are examined more closely.
“When you are in a context that is brutal and more demanding, if you make a small operational mistake, it is immediately visible,” he said, adding that he understands it as a “wake-up call” and very seriously.
Shares in the owners of brands Chrysler, Jeep, Fiat, Citroen and Peugeot have fallen more than 55% since March, the worst among European auto stocks and reducing the company’s value by 47 billion euros ($52 billion).
Although Stellantis is committed to its 2024 dividend, Tavares said it is too early to confirm the plan for next year.
“The time for 2025 has not come, we will see what happens at the end of 2024 for the discussion and decision for 2025,” he said.
Barclays downgraded the stock to “equal weight” from “overweight” and cut its 2024-26 EBIT (operating profit) estimates. by 33-45%. Stellantis’ large reduction in free cash flow is said to call into question its potential for dividends and buybacks.
“We made the wrong move in Stellantis, as we were too slow to recognize the US inventory problem and reduced our EU/US market shares,” Barclays analysts said.
They also pointed out that Stellantis finance chief Natalie Knight had confirmed forecasts of a double-digit EBIT margin just a week before the profit warning.
Source: Seebiz.eu
Photo: Arhiva Autoblog.rs / Stellantis
Source: autoblog.rs
