Stock Declines for Stellantis and Aston Martin
Paris-listed shares in Stellantis (EPA:STLAM) tumbled, and Aston Martin Lagonda’s (LON:AML) stock price slumped in London on Monday after both carmakers issued profit warnings due to sluggish demand in China.
Stellantis Profit Warning
In a statement, Stellantis stated it now expects to report a 2024 adjusted operating income margin of between 5.5% to 7.0%, a decrease from a prior estimate for a “double digit” increase.
Roughly two-thirds of the reduction is attributed to “corrective actions” in its North American operations. Stellantis also cited fierce electric-vehicle competition in China, the world’s largest automotive market, and a “deterioration in global industry dynamics.”
Additionally, the company flagged that lower-than-expected sales performance in the second half of the year across most regions contributed to the revised outlook. Industrial free cash flow is now projected to slip to negative 5 billion euros to negative 10 billion euros, altering previous estimates that anticipated positive cash flow. This revision arises from lower adjusted operating income forecasts and the impact of “temporarily elevated working capital” in the latter half of 2024. Following the profit warning, Stellantis saw its stock price decline by over 12%.
Aston Martin’s Challenges
In a related downturn, Aston Martin Lagonda warned it does not expect to report positive free cash flow in the first half of the year. The sports car manufacturer also slashed its 2024 wholesale volumes target, facing supply chain challenges and late arrivals of key components.
The company noted facing “weak demand” in China as well but acknowledged the country as a “significant market opportunity” as its macroeconomic conditions improve. Full-year adjusted earnings before interest, taxes, depreciation, and amortization are now anticipated to be in the “high teen’s percentage,” below its earlier estimate in the “low 20s%.”
Aston Martin CEO Adrian Hallmark stated, “It has become clear that we need to take decisive action to adjust our production volumes for 2024 due to supplier disruption, weak macroeconomic conditions in China, and to realign our production plans for future efficiency.”
As a result, Aston Martin shares plummeted more than 28% in morning trading. These warnings come shortly after German carmakers Volkswagen (ETR:VOWG_p), Mercedes-Benz (OTC:MBGAF), and BMW (ETR:BMWG) downgraded their financial outlooks, also citing weakness in China.
In related news, analysts at Stifel downgraded their rating of Porsche Automobil Holding, a major shareholder in VW and Porsche AG, from “Buy” to “Hold.”
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