Stellantis will not run to split electric vehicles from fossil fuel vehicles

MILAN – Stellantis is not considering splitting its electric vehicle (EV) business from its legacy combustion engine operations, its finance chief said on Thursday, with carmakers presenting revenue data above expectations for the first quarter.

Chief Financial Officer Richard Palmer told analysts that he did not see the huge benefits of the kind of separation pursued by rivals such as Renault of France and US Ford.

“We need to manage the company and our assets through this transition,” he said. “The investment we need to make is to create cash flow through the internal combustion business.”

Palmer said the group, formed last year through the merger of Fiat Chrysler and Peugeot maker PSA, was not opposed to adjusting its structure “but we do not expect any major changes.”

The world’s fourth-largest carmaker said its net revenue rose 12% to 41.5 billion euros ($ 44.1 billion) during the January-March period, as strong prices and the type of car sold helped offset the impact of the semiconductor deficit on volume. .

According to a Reuters poll, it is at the top of analysts’ expectations of 36.9 billion euros. Milan-listed shares rose 0.5% by 1415 GMT, in line with Italy’s blue-chip index.

The impact of the chip crunch was evident in the decline in shipment figures, which fell 12% to 1.374 million vehicles in the quarter.

It was a similar story for Germany’s BMW, which posted higher revenue on Thursday and saw lower car sales.

Recovery Riding

Stellantis, whose brands include Citroen, Jeep and Monthly, has confirmed its 2022 forecast for a double-digit consistent operating income margin after last year’s 11.8% and a positive cash flow despite supply and inflation headaches.

Morgan Stanley analysts said after the results that Stalantis had better management than many of his colleagues and benefited from a significant exposure to a strong U.S. economy and the European recovery from the COVID-19 epidemic. They further say that it has been less affected by a slower Chinese economy.

Palmer said it is important for the team to maintain a double-digit margin and provide positive cash flow.

“A 12% increase in revenue with a 12% decrease in volume indicates a very strong performance in price and mix, which is a good start for our margin performance,” he said.

He said problems with semiconductor supply were expected to ease this year with continued improvement in 2023. “But to be honest, I can’t give a date for when they will be resolved,” he added

The cost of raw materials will also weigh, Palmer said, adding that the group could raise its initial forecast for 4 billion euros in additional related costs this year.

“I’ll give you a better view of the first half, but the impact is likely to be up to 50%,” he said.

(1 = 0.9422 euros)

(Additional reporting by Nick Kerry; editing by Keith Weir, Thomas Janowski and Edmund Blair)

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