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Stellantis and Aston Martin shares tumble after carmakers issue profit warnings

Published 09/30/2024, 04:32 AM
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Investing.com -- Paris-listed shares in Stellantis (EPA:STLAM) tumbled and Aston Martin Lagonda's (LON:AML) stock price slumped in London on Monday after both of the carmakers issued profit warnings due in part to sluggish demand in China.

In a statement, Stellantis said it now expects to report 2024 adjusted operating income margin of between 5.5% to 7.0%, down from a prior estimate for a "double digit" increase.

Roughly two-thirds of the reduction is due to "corrective actions" in its North American operations, Stellantis said. The French-Italian group also cited fierce electric-vehicle competition in China -- the world's biggest automotive market -- and a "deterioration in global industry dynamics."

"Other contributors include lower than expected sales performance in the second half of the year across most regions," the company flagged.

Industrial free cash flow is also seen slipping to negative 5 billion euros to negative 10 billion euros compared to previous guidance that the figure would be "positive." The revision stems from the lower adjusted operating income outlook as well as the impact of "temporarily elevated working capital" in the second half of 2024, Stellantis said.

Stellantis, which was created through the merger between Fiat Chrysler and France's PSA in 2021, saw its stock price fall by more than 12%.

Elsewhere, Aston Martin Lagonda warned that it does not expect to report positive free cash flow in the first half.

The sportscar maker also slashed its 2024 wholesale volumes target as it grapples with supply chain challenges, including the late arrival of key component parts.

Aston Martin added that it has faced "weak demand" in China as well, although it said the country presents a "significant market opportunity [...] as its macroeconomic environment improves."

Full-year adjusted earnings before interest, taxes, depreciation and amortization are now seen in the "high teen's percentage," below its earlier estimate in the "low 20s%".

"[I]t has become clear that we need to take decisive action to adjust our production volumes for 2024 given a combination of supplier disruption, the weak macroeconomic environment in China and a proactive decision to strategically re-align our production plans to optimise efficiency and achieve a more balanced delivery cadence in the future," said Aston Martin CEO Adrian Hallmark in a statement.

Aston Martin shares shed more than 28% of their value in morning trading.

The announcements come after German carmakers Volkswagen (ETR:VOWG_p), Mercedes-Benz (OTC:MBGAF) and BMW (ETR:BMWG) all downgraded their financial outlooks earlier this month because of weakness in China.

Meanwhile, analysts at Stifel have downgraded their rating of Porsche Automobil Holding, a major shareholder in VW and Porsche AG, to "Hold" from "Buy."

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