In a bid to quell investor concerns, Stellantis’ CEO Carlos Tavares reaffirmed the company’s commitment to maintaining its dividend and share buyback program for 2024. However, he stopped short of making any promises for 2025, citing the need to reassess the company’s financial situation at the end of the year. The carmaker’s shares took a hit, plummeting 4% to their lowest point in over a year, following a profit warning earlier in the week.
Tavares’ comments came during a visit to a factory in southern France, where he sought to reassure investors that the company’s financial commitments for 2024 remain unchanged. However, his refusal to provide guarantees for 2025 sparked concerns that the company’s dividend payouts and buybacks may be at risk.
The news sent shockwaves through the automotive sector, with Stellantis’ shares falling over 43% this year, making them the worst performers among European automotive stocks. Analysts at Carmignac likened the situation to “autumn leaves falling,” citing the profit warning as a major blow to the company’s investment thesis.
The company’s Investor Relations head, Ed Ditmire, attempted to downplay concerns, stating that it was too early in the year to discuss capital returns. However, his comments did little to assuage investor fears, with Barclays downgrading the stock and slashing its 2024-26 EBIT estimates by 33-45%.
Analysts at Bernstein expressed surprise at the magnitude of the profit warning, citing the company’s previous reputation for constructive management and focus on inventory control and pricing. However, they acknowledged that investors had become too complacent, trusting that the company was in safe hands under Tavares’ leadership.
The automotive sector as a whole has been facing significant challenges, including the transition to electric engines, increased competition from Chinese manufacturers, and declining consumer confidence. As a result, investors have been reducing their exposure to European autos, leading to a decline in the broader auto index.
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