Automaker Stellantis reaps $15B profit in 1st year of merger
FRANKFURT, Germany (AP) — Automaker Stellantis said Wednesday that it made 13.4 billion euros ($15.2 billion) in its first year after it was formed from the merger of Fiat Chrysler Automobiles and PSA Group and would pay out record profit-sharing checks to unionized U.S. workers.
The earnings nearly tripled profits compared with its pre-merger existence as two separate companies, as the maker of Jeep, Opel and Peugeot vehicles exploited cost efficiencies from combining the businesses.
The result compared to a combined 4.79 billion euros for the separate companies in 2020 before the merger, which took effect on Jan. 17, 2021. Revenue for the combined business rose 14%, to 152 billion euros.
The company also announced that its 43,000 U.S. workers represented by the United Auto Workers union will get profit-sharing checks of $14,670. It’s the highest payment since profit-sharing began 35 years ago. The checks, based on North America financial performance and hours worked by employees, will go out March 11. The company’s North American adjusted operating income was $11.36 billion euros ($12.9 billion), up 16.3% from 2020.
Stellantis also said it plans to pay a 3.3 billion euro ($3.74 billion) dividend to shareholders, who still have to approve the proposal.
CEO Carlos Tavares said the results “prove that Stellantis is well positioned to deliver strong performance” and had overcome “intense headwinds” during the year.
Automakers have struggled with shortages of key parts such as semiconductor electronic components and rising costs for raw materials as the global rebound from the worst of the coronavirus pandemic brings more demand.
The profits were helped by high prices that Stellantis was able to get for its vehicles because supplies were short. In North America, the company’s most profitable region, Stellantis used its available computer chips to build higher-priced vehicles such as Ram pickups and Jeep Grand Cherokee SUVs. Its average North America sales price rose about 20% from a year earlier to $47,000, the company said.
Chief Financial Officer Richard Palmer predicted continued semiconductor supply problems this year, a well as other supply chain constraints and labor costs rising due to absenteeism, particularly in North America. The company expects 3% operating income growth in most of its markets.
Tavares told analysts on a conference call Wednesday that semiconductor supplies, rising raw material costs and geopolitical situations will be hurdles for the company this year. “We see an improvement on the semiconductor supply front, but still a very small and very low-pace improvement,” he said.
Stellantis said the benefits of the merger were worth some 3.2 billion euros during the year. Mergers can lead to streamlined costs as companies combine functions and spread fixed costs over a larger revenue base.
The company accelerated its rollout of battery-powered vehicles, with sales of low-emission vehicles reaching 388,000 — an increase of 160%. Tavares said the company currently has 19 battery-electric vehicles on sale globally, and that will rise to 32 by the end of 2023.
Stricter environmental regulations in Europe and China are pushing automakers to roll out more electric vehicles with longer range. Stellantis started production of a hydrogen fuel cell commercial van under its Opel brand in December.
A Stellantis-controlled joint venture with GAC to build and sell Jeeps in China has been signed, and approval by Chinese authorities is expected, Tavares said. In January Stellantis announced the venture, but GAC said it had not been informed of the change.
Stellantis’ other brands include Chrysler, Citroen, DS, Fiat, Maserati, Ram and Vauxhall.