The less sales, the more you earn. This is what emerges from Stellantis quarterly, the giant led by Carlos Tavares which closed the first quarter of 2022 with net revenues of 41,5 billion euros, an increase of 12% compared to the 37 billion euros of the first quarter of 2021. In the same period, consolidated deliveries totaled 1.374.000 units, down 12% primarily due to unfulfilled orders for semiconductor procurement.
Stellantis suffers from chips but recovers on electricity
The paradox can be explained, according to the chief financial officer Richard Palmer, “thanks to net prices, a better mix of models and more favorable conversion rates”. In short, the excellent performance of the American market accentuated by the increase in the dollar plays in favor of the multinational chaired by John Elkann. But also the greater profitability of the cars sold in Europe, where, in the absence of adequate supplies of chips, the most profitable models were favoured.
Of particular note is the over 50% year-on-year growth in sales of electric vehicles in the Enlarged Europe region. Thanks to this policy, Palmer continues, “the guidance for the full year, with double-digit adjusted operating profit margins and positive cash flows, is confirmed, despite the unfavorable conditions in terms of procurement and inflation, thanks to the success of models and strategic partnerships”. Without forgetting the steps forward towards reaching the production capacity of 400 GWh for batteries by 2030 thanks to the signing, in the first quarter of 2022, of strategic partnerships with LG Energy Solution and Automotive Cells Company (ACC), which will allow respectively build the first large-scale lithium-ion battery production plant in Canada, Windsor and a new gigafactory in Termoli.
These data have given the charge to Stellantis in Piazza Affari. The shares of the automotive group rose by 3,77% to 13,306 euros, with a maximum reached at 13,462 euros, achieving one of the best performances of the Ftse Mib (+1,78%). Performance in line also on the Paris Stock Exchange, where Stellantis rises by 3,62% with the Cac40 up by 2%.
Ferrari recovers after the crash but the market penalizes luxury
A performance that consoles John Philip Elkann who had to record the day before, as president of Ferrari a 5,74% drop against a positive quarter. Contrary to Stellantis, the Rossa increased its sales in the first three months (3.251 units in the quarter, + 17%) which in 2021 reached the record figure of 11.155 vehicles. And the prospects for the current year suggest new records: the bookings for the new models, announced the CEO Benedetto Vigna, cover the entire production capacity of Maranello for the whole of 2023. But the new records, fueled by the success of the Daytona Sp 3, did not prevent a sharp slowdown on the Stock Exchange, partially corrected by this morning's recovery: +1,66% at 10 am. Why this different opinion of the markets?
- Ferrari paid the diffidence of the market towards the luxury sector, of which she is now considered a leading exponent. Falling activity in China, as well as the prospect of rising rates, have prompted traders to reduce exposure to a sector boasting exaggerated multiples. Hence the choice to stop after the recent gains: the business model is solid and sustainable, but correctly priced.
- Waiting for the news that Benedetto Vigna is ready to announce next June 16, in the Capital Market Day of Maranello in which he will take stock of the progress towards the electric Ferrari and the development of the various partnerships that will have to push the Red to new goals. Meanwhile, Vigna, from the Stm school, has confirmed that he is a prudent technologist, at the service of tradition: the Purosangue, the next racing car in the Emilia Valley, will mount the V12 engine, the most powerful and with extreme fuel consumption, as requested by the planet's super-rich : the green turn is reserved for the future.
- Stellantis, on the contrary, is rewarded because once again Tavares has presented results that are better than expected, without making discounts on sales prices: the task of supporting the economic situation falls to the governments, as Italy is also about to do.
Stellantis reaps the rewards of successes in North America
The success of this line owes much to the American market. North America generated $20,7 billion on the strength of new models, including the Jeep Grand Cheroke and Wagoneer/Grand Wagoneer.
But in the EMEA area Stellantis has nonetheless defended itself thanks to the success of the new Ds4, Fiat New 500, Opel Mokka and the range of light commercial vehicles for the Enlarged Europe region.
The picture does not change in perspective. On the contrary, Stellantis expects a slowdown in North America (growth unchanged compared to the previous +3%), in Europe (-2% compared to the previous +3%) and is content to confirm the growth forecasts in Latin America and in Asia, respectively +3% and +5%.
But, despite the drop in volumes, profitability and free cash flow will continue to grow, confirming the group's ability to manage the various plants in the most efficient way but also the results of the sales policy based on strong savings in commercial costs at the expense the organization of sales networks. Waiting to increase the share of cars sold online, skipping mediations and various expenses.
And Tavares accelerates on electric
While waiting to hit the target, Tavares accelerates on the electric front, despite the CEO never missing an opportunity to reiterate his skepticism for the "all-electric" solution of the European authorities. "As I have been repeating to everyone for seven years, including many heads of state - he said last week on a visit to Alfa Romeo - at the basis of every transformation there is energy and before starting with electrification it was necessary to think about it, have clear ideas on how to get it: and this remains the great strategic problem”.
ALSO READ: Tavares: “Limited war impact on Stellantis. Europe decides on energy”
“They didn't listen to our appeals – he added – We manufacturers said that electric cars are ready, Stellantis already has 19 BEV vehicles and next year they will become 23, but the long-term problem is clean and sustainable energy. What is still missing is the certainty of how to produce it. Each country has gone its own way and Europe will increasingly split into two groups, between those who accelerate like my Portugal where 61% of energy is already from renewable sources, and those who are still looking for other solutions: for example nuclear or new gas reserves, some will perhaps cling to fossils. The great unknown of the future is this, we need to accelerate on renewables. It had to be done before starting with the electrification processes”.
In this matter, however, Stellantis has not stood idly by. In the quarter, the company recorded “significant progress towards achieving 400 GWh production capacity for batteries by 2030,” explains a company note. In particular, strategic partnerships were signed with LG Energy Solution and Automotive Cells Company (ACC), which will respectively allow the construction of the first large-scale lithium-ion battery production plant in Canada, in Windsor, and a new one " gigafactory” in Termoli.
Technology unites the plans of Tavares and Vigna
Meanwhile, the strategic plan "Dare Forward 2030" is advancing, which marks the path towards a sustainable future of the house born from the merger between FCA and PSA based on the increasingly close integration between the world of mobility and the digital economy: Stellantis has a strategic partnership with Amazon and Foxconn to develop a series of services to redevelop the offer on the market. The goal is to develop an offer based on basic models (accessible to the general public) which can be enriched with functions to be rented or purchased via the App.
It is on this ground under the banner of technology that the challenges of Vigna, a chip scientist called upon to transform the power of Maranello's horses into volts, and of Tavares, a rally driver in search of strong emotions in the name of cost-effective innovation. Just like the engineer Elkann, the first to be convinced that the car revolution has just begun.
