Jeep, Dodge-maker Stellantis’ profit slides as Detroit Three strikes bite

Global auto giant Stellantis on Thursday reported a 10% year-on-year drop in profit for the second half of 2023 as a six-week strike at the so-called “Detroit Three” automakers hampered production at the group’s North American profit center.

Adjusted operating income (AOI) was 10.2 billion euros ($10.96 billion) in the July-December period, down from 11.3 billion euros in the same period in 2022.

However, the company’s earnings proved more resilient to the impact of strike action than market expectations, with AOI beating the 9.54 billion euros forecast by analysts polled by Reuters. Stellantis shares rose more than 4% in early European trading after the results were announced.

In North America, the group’s AOI margin fell 100 basis points year-over-year to 15.4%, which Stellantis said in its earnings report was “primarily due to production disruptions and costs related to new labor agreements.”

Stellantis reported in late October that the UAW strike, which lasted six weeks starting on September 15, also targeted General Motors and FordThrough October, the company had lost $3.2 billion in revenue.

The company, which owns household names such as Jeep, Dodge, Fiat, Chrysler and Peugeot, reached an agreement with the UAW in late October to invest $18.9 billion in the United States through 2028. Stellantis U.S. employees approved the agreement, which included a wage increase of at least 25% on November 17 and the reopening of an idled factory in Illinois.

Industrial free cash flow in the second half of the year fell 24% from the same period last year to 4.2 billion euros, while revenue also fell slightly to 91.2 billion euros.

The car giant reported strong overall profits for 2023 despite being hit by six weeks of strike action.

Full-year net revenue was 189.5 billion euros, an increase of 6% from 2022, and comprehensive shipments increased by 7%. Adjusted operating income in 2023 will grow by 1% to 24.3 billion euros, and industrial free cash flow will grow by 19% to 12.9 billion euros.

The world’s third-largest automaker by revenue proposed a dividend of 1.55 euros per common share to shareholders on Thursday, up about 16% from the previous year, and announced a 3 billion euro share buyback plan for 2024.

Stellantis CEO Carlos Tavares said in a statement: “We have just passed the three-year mark since Stellantis was founded, and I sincerely thank our team for executing at the highest level, even in the face of the strongest headwinds, for Contributing significantly to our growth.” stated.

“Today’s record financial results demonstrate that we have become the new global leader in our industry and will remain rock solid as we look ahead to a tumultuous 2024.”