Stellantis sought to downplay the repercussions of labor strikes in North America over wage hikes, emphasizing that they would not disrupt the automaker’s goals regarding profitability and cash reserves.
Unions Secure Record Salary Increases
After a six-week coordinated strike campaign by unions in the United States and Canada, which commenced last month and expanded in October, tentative agreements have been reached. These agreements secured record salary increases for workers at the Detroit Three automakers.
Moderate Impact on Profitability
Stellantis’ Chief Financial Officer, Natalie Knight, stated that the strikes would have a modest impact on profitability, costing the company less than 750 million euros (USD 800 million). This cost comes after a negative revenue impact of approximately 3 billion euros.
Firmly on Track with Annual Forecast
The Stellantis group, the owner of renowned brands such as Fiat, Peugeot, Jeep, and Ram, has reiterated its full-year forecast. This forecast includes achieving a double-digit margin on adjusted operating profit and maintaining positive industrial free cash flow.
In a media briefing, Knight, who assumed her role earlier this summer, expressed her confidence in the company’s global and U.S. positioning. She emphasized their unwavering focus on sales and profitability in all regions.
Knight further highlighted that the 750 million euro profitability impact would be the least significant among the Detroit Three automakers.
Ford has estimated that the strikes will reduce its 2023 adjusted operating profit by approximately USD 1.3 billion, while GM anticipates an impact of no less than USD 1 billion.
Knight noted that they are actively exploring mitigation strategies in response to the strikes’ effects, which will be unveiled as they progress.
Positive Market Response
Stellantis’ shares saw an increase of 2.2% by 0950 GMT, outperforming Italy’s blue-chip index.
Inventory Growth and Revenue Increase
The group’s inventory more than doubled during the first nine months of the year. Simultaneously, the supply chain situation has been gradually returning to normal, which has enabled Stellantis to address recent work stoppages.
Stellantis reported a 7% increase in third-quarter revenue, reaching 45.1 billion euros. This growth was attributed to improved volumes and consistent pricing, partially offset by foreign exchange rate fluctuations.