By Giulio Piovaccari and Gilles Guillaume
MILAN (Reuters) -Revenue and operating profit grew at Stellantis in the first half to beat estimates, with CEO Carlos Tavares saying the automaker would have to accelerate cost cutting to keep profitability strong in a more challenging pricing environment.
The world’s third largest automaker by sales said on Wednesday its January-June adjusted earnings before interest and tax (EBIT) rose 11% to 14.1 billion euros ($15.6 billion), topping the 12.1 billion expected by analysts in a Reuters poll.
New CFO Natalie Knight, who took the job this month, said pricing power was still the main driver for the results of the group whose brands include Fiat, Peugeot, Alfa Romeo, Ram and Jeep.
“We did a variety of price increases and the group has been outstanding at holding on to those, and also looking at where additional pricing was appropriate in the first half,” she said.
Milan-listed shares in Stellantis were up 2.5% by mid-morning, outpacing a 0.4% rise in Italy’s blue-chip index.
Equita’s analyst Martino De Ambroggi said that strong first half results, including for cash generation, would support an improvement of his forecasts for the group’s full-year results, despite an expected pricing power reduction.
U.S. electric car maker Tesla kicked off a round of price cuts in China in January, putting pressure across the board on automakers and suppliers to contain costs.
MARGINS
Stellantis’ margin on adjusted EBIT slipped to 14.4% from 14.5% a year earlier, when pricing power had been supported by a significant inflationary environment, Chief Executive Carlos Tavares said.
“If the market is more competitive in terms of pricing, we need to work harder on cost reduction to make sure that we give back to the market the breathing space it needs while protecting our per unit margins,” he said.
He argued that the Stellantis margin performance was still better than those of Tesla and GM, which he said posted margins of 10.5% and 8.3% respectively.
Its first-half EBIT margin fell 60 basis points to 17.5% in North America, the group’s most profitable region.
Stellantis, which shipped more vehicles in the first half also thanks to fewer logistic issues in Europe, confirmed its target for a double-digit margin for the full year.
($1 = 0.9038 euros)
(Reporting by Giulio Piovaccari in Milan and Gilles Guillaume in Paris; editing Federico Maccioni, Jason Neely and Keith Weir)
