Investing.com – Shares of Stellantis NV (NYSE:STLA) took a hit on Thursday after the automaker reported a decrease in both net profit and adjusted operating income for the first half of 2024.
The company attributed this downturn primarily to lower sales, production disruptions from a product overhaul, and weak performance in North America.
Analysts from RBC (TSX:RY) Capital Markets flagged that North America, typically a stronghold, faced challenges due to production cuts and pricing pressures. Europe also underperformed, driven by reduced volumes and pricing. Despite these challenges, Stellantis remains optimistic about its long-term prospects, driven by a robust pipeline of new products. The company is currently undergoing a significant transformation focused on electric vehicles and advanced technologies.
Upcoming models such as the refreshed Ram 1500 and the Peugeot (OTC:PUGOY) 3008 on the new STLA platform are expected to drive growth in the upcoming quarters.
UBS Global Research in a note said that the automaker missed adjusted operating income expectations by 6%, with the margin falling at the lower end of guidance. Stellantis anticipates a challenging second half due to planned production cuts in North America aimed at reducing inventory levels.
UBS added the importance of inventory reduction for Stellantis, noting that while crucial, it will hinder short-term performance and dampen investor sentiment. Near-term sentiment is expected to remain subdued as the market awaits clearer signs of recovery.
Stellantis expects to benefit from cost reductions and a more favorable labor environment, although these gains may be offset by geographic mix challenges, ongoing pricing pressures, and a higher proportion of electric vehicles, said RBC.