Stellantis NV Q4 FY2024 earnings call

• Prioritized product launches, with 20 in 2024 and 10 in 2025. Examples include Dodge Daytona and Jeep Wagoneer S in the US in December, and Grande Panda, Citroen C3, Opel Frontera in Europe in January.
• Focused on building trust with stakeholders, including shareholders, suppliers, unions, and dealers.
• Empowered regions to make decisions closer to customers and solve problems where they happen.
• Aim for profitable growth, emphasizing execution and profitability, with a focus on spending capital where customers are and offering a range of products and powertrains to reach more market segments.

North America: Inventory reduction actions and pricing repositioning pressured results in 2024, especially in the second half. Europe: Unusual gap in production of A and B segment products reduced second half volumes, but B segment successors are now in production. Third engine regions: Collective 7% revenue decline, but combined AOI margins down by only 1 percentage point, still at a healthy 14%.

• Expect 2025 to show improvement with mid-single-digit adjusted operating income margin for the full year, with significant variation between first half and second half. First half expected to see solid sequential improvement from low single-digits, second half expected larger sequential margin improvement.
• Anticipate return to positive industrial free cash flow in 2025, with positive flows in the second half.
• Transitioning to quarterly reporting, expected to begin in Q1 2026 to facilitate better comparisons with peers.

• Regulatory challenges with tougher and divergent regulations, including ongoing discussions with the European Commission.
• Geopolitical decoupling and potential tariff impacts, with ongoing discussions and the need to consider different scenarios.
• Competition from Chinese OEMs, such as Tesla and BYD, with their advancements in electric vehicles, software, and autonomous features.

Q: George Galliers asked about whether it still makes sense to have a global auto company in a geopolitically decoupled world and if breaking up the organization would create shareholder value.

A: John Elkann responded that empowering regions to create regional scale is a strength, and global reach benefits aspects like software and features, and they are well-equipped with regional and global scale.

Q: Thomas Besson asked about the dynamic of growth being an H2 story and absolute inventory levels.

A: John Elkann and Doug Ostermann responded that 2025 is a year to get back to growth and profitable growth, with absolute inventories expected to ramp a bit towards year end but managed to day supply; in North America, new HD pickups in Q1 and Cherokee replacement with HEV powertrain in second half; in Europe, smart cars and STLA Med vehicles coming into market with sales pace picking up.

Q: Daniel Roeska asked about market share gain in the US and production ramp-up.

A: John Elkann and Doug Ostermann responded that they are focused on great products, trust with dealers, marketing, and reasonable market share gain, with production planning adjusted based on market dynamics and marketing efforts to grow share.

Q: Patrick Hummel asked about AOI bridge components, full potential of the company, and R&D levels.

A: Doug Ostermann responded on AOI margin expectations for North America and Europe, pricing and cost expectations; John Elkann added that 2025 is a year to get back to profitable growth and the next CEO will help reach full potential.

Q: Jose Asumendi asked about operational changes and financial planning for Europe.

A: John Elkann responded on regionally empowered organization and partnership with Leapmotor; Doug Ostermann responded that Europe will have a stronger second half with new vehicles coming into market in second half.

Q: Philippe Houchois asked about balancing cost of rebuilding market share and excess capacity.

A: John Elkann and Doug Ostermann responded that focusing on great products and reaching customers is the focus, with good signs in retail market share and progress in key markets; more product launches will help utilize plants.

Q: Tim Rokossa asked about impairments and R&D levels.

A: Doug Ostermann responded on one-time unusual items like restructuring charges, Takata airbag recall, and Maserati write-downs; John Elkann responded on R&D investments in multi-energy platforms for flexibility and sufficiency of current R&D levels.

Q: Stuart Pearson asked about cash flow and CEO search.

A: Doug Ostermann responded on expected positive free cash flow excluding working capital and credit pooling with Leapmotor; John Elkann responded on CEO search with focus on leadership abilities, cultural dexterity, understanding of capital, technology, and working with stakeholders, aiming to appoint best CEO by first half of 2025.