Stellantis reports record profitability in North America in first half of year
Sales of Jeep SUVs and Ram trucks drove Stellantis NV to record profitability in North America for the first half of 2021 as a global microchip shortage kept transaction prices high and mix strong, prompting the automaker to increase its annual guidance.
Adjusted operating income in North America was $6.217 billion, about five times more than last year when Fiat Chrysler Automobiles NV idled plants for eight weeks amid the COVID-19 pandemic. U.S. average transaction prices rose to $48,000 in June. North America's operating income margin of 16.1% for the first six months prompted Stellantis to increase its annual forecast for the region to 10%, up from 8%.
Globally, the transatlantic automaker recorded $7.048 billion in profitability compared to the loss from the combined results of FCA and French rival Groupe PSA during 2020's pandemic-struck first half. The companies merged in mid-January. All divisions were profitable.
With an adjusted operating income of 11.4%, Stellantis increased its 2021 forecast to 10%, up from 5.5% to 7.5%, assuming no further deterioration in semiconductor supply and COVID-19 lockdowns in Europe and North America. Shares were rising nearly 4% in Milan and Paris and nearly 5% in pre-market trading in New York.
"I would like to thank warmly all Stellantis employees for their outstanding focus on operational excellence and synergies execution that have led the Company to achieve very strong H1 financial results," CEO Carlos Tavares said in a statement. "While delivering this strong operational performance the company also made significant progress on strategic matters related to electrification acceleration and software, which are fundamental pillars of our strategy."
Last month, Stellantis joined competitors in accelerating its move toward electrified vehicles. It outlined its plans to invest roughly $35.5 billion in the technology and software by 2025. The company is planning 21 low-emission vehicle launches over the next two years. That includes a plug-in hybrid Dodge vehicle in 2022 and Jeep's first all-electric offering in the first half of 2023. Alfa Romeo's lineup also will go fully battery electric in 2027.
Stellantis globally lost 20% of planned production, or about 700,000 vehicles, because of unfilled semiconductor orders. That weighed on industrial-free cash flows, which represented a loss $1.381 billion, though the company expects positive cash flows by year's end. North American dealer inventories are down 104,000 vehicles from December.
Still, the automaker reported $89.41 billion in revenue, up 46% year-over-year. Its adjusted operating income of $10.24 billion was 10 times larger than a year ago. Diluted earnings were $2.56 per share.
Adjusted operating income was $3.359 billion in Europe, $387 million in South America and $293 million in Asia. The Maserati luxury brand was back in black with a $34 adjusted operating income.
Ford Motor Co. reported $3.8 billion in net income for the first half of 2021. General Motors Co.'s first-quarter profit was $3 billion, and it will report second-quarter results on Wednesday.