Stellantis misses cash target

Stellantis disclosed a 4 billion euro cash shortfall for the third quarter, a figure that falls short of its internal targets as the company executes a massive restructuring. The cash drain, equivalent to $4.5 billion, persists despite a sharp rise in operating income.

Revenues climbed 1% to 37.6 billion euros compared to the same period last year. Adjusted operating income surged 184% to 256 million euros, up from 90 million euros a year earlier. The improvement in bottom-line profitability did not translate into positive cash flow, with industrial free cash flow remaining negative at 4 billion euros, though an improvement from the 4.3 billion euro deficit recorded previously.

Stellantis shares gained 3.6% in early European trading following the announcement. The stock has lost 62% of its value since the start of the year. The company is currently implementing a 60 billion euro, or $66.7 billion, turnaround strategy known as FaSTLAne 2030. This plan aims to restore profitability after years of declining sales, particularly in North America.

CEO Antonio Filosa stated that the company continued to make progress in the early execution of the plan during the quarter. He cited the launch of new products and the acceleration of partnerships as key factors in delivering improvements in manufacturing and quality. Filosa reaffirmed the company's expectation of achieving positive industrial free cash flow by 2027.

The strategy involves investing 36 billion euros across the brand portfolio. Sixty percent of that capital is allocated to the North American sector, which has struggled with performance. The plan also includes introducing new vehicles, refreshing existing models, and integrating new technologies into products. Filosa outlined this five-year roadmap in May.

European carmakers face intensifying competition in China from domestic brands such as Xiaomi, BYD, and Geely. Porsche recently announced it would reduce its exposure to the region due to declining sales. Mercedes-Benz reported a slump in third-quarter car sales in China, citing a challenging market environment.

Filosa told CNBC earlier this month that European regulators must do more to incentivize local manufacturing to counter Chinese rivals. He argued for regulations that incentivize, reward, and protect companies that can demonstrate they design and engineer their vehicles.