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

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

Adjusted operating income (AOI) came in at 10.2 billion euros ($10.96 billion) for the July to December period, down from 11.3 billion euros for the same period in 2022.

However, the earnings proved more resilient to the impact of industrial action than the market had expected, with AOI exceeding a forecast of 9.54 billion euros by analysts polled by Reuters. Stellantis shares jumped more than 4% in morning trade in Europe following the results.

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

Stellantis reported in late October that labor strikes by the United Auto Workers union, which ran for six weeks from Sept. 15 and also targeted General Motors and Ford Motor, cost the company $3.2 billion in revenue through October.

The company, which owns household names including Jeep, Dodge, Fiat Chrysler and Peugeot, reached an agreement with the UAW in early November that will see the company invest $18.9 billion in the U.S. by 2028. Stellantis workers stateside ratified the deal, which includes at least 25% wage increases and the reopening of an idled plant in Illinois, on Nov. 17.

Second-half industrial free cash flows were down 24% from the same period last year at 4.2 billion euros, while revenues were also down slightly at 91.2 billion euros.

Despite the hit from the six weeks of industrial action, the auto giant reported strong earnings for 2023 as a whole.

Net revenues came in at 189.5 billion euros for the full year, up 6% from 2022, and consolidated shipment volumes rose 7%. Adjusted operating income for 2023 was up 1% to 24.3 billion euros, while industrial free cash flows increased by 19% to 12.9 billion euros.

The world’s third-largest automaker by revenues on Thursday proposed a dividend to shareholders of 1.55 euros per common share, roughly a 16% increase from the previous year, and announced a 2024 share buyback program of 3 billion euros.

“As we just passed the three-year mark since Stellantis’ inception, I warmly thank our teams who are executing at the highest levels and contributing greatly to our growth story, even in the strongest of headwinds,” Stellantis CEO Carlos Tavares said in a statement.

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