Earnings call transcript: Stellantis Q2 2025 results miss EPS forecasts

Stellantis NV reported its second-quarter earnings for 2025, revealing a significant miss on earnings per share (EPS) expectations. The company posted an actual EPS of -0.78, far below the forecasted 0.35, resulting in a negative surprise of 323.69%. Despite this, Stellantis slightly exceeded revenue forecasts, reporting 38.4 billion euros against an expected 37.7 billion euros, a 1.86% surprise. The stock reacted negatively, with a pre-market drop of 4.36%, and continued to decline, closing at 7.912 euros, down 1.82% from the previous session. According to InvestingPro data, the stock is currently trading significantly below its Fair Value, with a concerning -17.07% revenue decline over the last twelve months. InvestingPro analysts have identified 11 key investment factors for Stellantis, available in the comprehensive Pro Research Report.

Key Takeaways

• Stellantis missed EPS expectations by a wide margin, reporting -0.78 against a forecast of 0.35.
• Revenue exceeded forecasts slightly, reaching 38.4 billion euros.
• The company’s stock declined sharply in pre-market trading, continuing a downward trend.
• Stellantis plans to launch 10 new products in 2025, focusing on hybrid and electric vehicles.
• Inventory levels decreased by 16% in Europe and North America, signaling operational improvements.

Company Performance

Stellantis faced a challenging second quarter, with consolidated shipments declining by 7% year-over-year to 2.7 million units. Net revenue dropped by 13% to 74 billion euros, reflecting broader industry challenges and specific operational hurdles. InvestingPro data reveals concerning fundamentals, including a weak gross profit margin of 8.19% and significant cash burn with negative free cash flow of $14.2 billion. Despite these setbacks, the company reported a sequential improvement from the second half of 2024, reducing its cash burn rate. The company maintains a notable dividend yield of 8.07%, though dividend growth has declined by 56.13% over the last twelve months.

Financial Highlights

• Revenue: 38.4 billion euros, a 1.86% surprise over forecasts.
• Earnings per share: -0.78, missing expectations by 323.69%.
• Adjusted Operating Income: 540 million euros, with a 0.7% margin.
• Industrial free cash flow: 3 billion euros outflow.

Earnings vs. Forecast

Stellantis’s actual EPS of -0.78 was a significant miss compared to the forecast of 0.35, marking a 323.69% negative surprise. This deviation is substantial compared to previous quarters, indicating potential challenges in cost management or revenue generation.

Market Reaction

The market reacted negatively to Stellantis’s earnings miss, with the stock falling 4.36% in pre-market trading. The decline continued throughout the day, closing at 7.912 euros, down 1.82% from the previous session. This movement places the stock closer to its 52-week low of 7.267 euros, reflecting investor concerns. InvestingPro analysis shows the stock trading at a notably low Price/Book multiple of 0.33, suggesting potential undervaluation despite the recent market pressure. Get access to detailed valuation metrics and 11 additional ProTips for Stellantis through the comprehensive Pro Research Report.

Outlook & Guidance

Looking forward, Stellantis expects net revenues to increase in the second half of 2025, with an adjusted operating income margin in the low single digits. The company is focusing on launching new products, including the first hybrid Jeep Cherokee and a reintroduced Dodge Charger. A Capital Markets Day is planned for the first quarter of 2026 to outline future strategies.

Executive Commentary

CEO Antonio Fallosa acknowledged the tough first half, stating, "H1 was incredibly tough and nowhere near where we want and need to be." CFO Doug Osterman emphasized the company’s strategic focus, saying, "We are making the tough decisions and executing on fundamental issues to build on our first-half progress." These comments highlight the company’s commitment to addressing its challenges and improving performance.

Risks and Challenges

• Supply Chain Disruptions: Ongoing challenges could affect production and delivery schedules.
• Market Saturation: Increasing competition in the BEV and hybrid markets may impact sales.
• Economic Pressures: Macroeconomic factors, including inflation and interest rates, could influence consumer spending.
• Strategic Realignment: The company’s restructuring efforts may face execution risks.
• Regulatory Changes: Potential shifts in trade policies and emissions regulations could affect operations.

Q&A

During the earnings call, analysts inquired about Stellantis’s dealer relations and fleet sales strategy. The company highlighted improvements in dealer relations and ongoing restructuring of its fleet sales approach. Tariff negotiations were also discussed, with Stellantis focusing on cost reduction and profitability.

Full transcript - Stellantis NV (STLAM) Q2 2025:

George, Conference Moderator: Hello, and welcome to Stellata’s Half Year twenty twenty five Results. And I hand over to your host today, Mr. Ed Ditmeyer, Head of Investor Relations, to begin today’s conference. Thank you.

Ed Ditmeyer, Head of Investor Relations, Stellantis: Thank you, George. Hello, everyone, and thank you for joining us today as we review Stellantis’ first half twenty twenty five results. Earlier today, the presentation material for this call, along with the related press release, were posted under the Investors section of the Stellantis Group website. Today, our call is hosted by Antonio Fallosa, Chief Executive Officer and Doug Osterman, Chief Financial Officer. Remarks, Antonio and Doug will be available to answer questions from the analysts.

Before we begin, I want to point out that any forward looking statements we might make during today’s call are subject to the risks and uncertainties mentioned in the safe harbor statement included in Page two of today’s presentation. As customary, the call will be governed by that language. Now I’ll hand over the call to Antonio Fulosa, Chief Executive Officer, Stellanis.

George, Conference Moderator: Thank

Antonio Fallosa, Chief Executive Officer, Stellantis: you. Good afternoon and good morning to everyone, and thank you all for joining us today. Before we dive into the presentation, I just want to say that it’s a great privilege for me to talk to you today for the first time as Stellantis’ CEO. I want to thank you for your interest in our company and the time and effort you put into understanding our performance, our perspectives and our plans. Just a few words about me before I start.

I have spent over twenty five years working at this company. I have learned a lot about what drives performance and what gets in the way of performance as well as the enduring value of our brands and the need to constantly ensure that they remain relevant. Most importantly, I’ve learned about the importance of our people and our culture. I believe in empowering our teams, encouraging them to be thoughtful, open and decisive. I don’t like blame.

I like responsibility and accountability. And I like to be clear with our teams about the challenges we face and the opportunities we can unlock by acting with courage, with energy and, yes, with joy. These are simple observations, I know, but they are not simplistic. They will be at the heart of the way we will work together. If we have lost some of these in recent times, we are here to put that right, rolling up our sleeves, running towards the difficult decisions and moving ahead.

So let’s begin with a summary overview of H1 and the outlook for H2. 2025 has been and will be a tough year, and these H1 results make that very clear. At the same time, we are making progress on our product wave and beginning to see early but encouraging improvement. Our new leadership team is in place and is committed to taking decisive actions. Our key commercial KPIs are much stronger now than they were six or twelve months ago.

And the second half has a range of new products that will catalyze growth. We are establishing our financial guidance. What we want to achieve for the rest of the year is a gradual sequential acceleration. We do that by launching new products, improving our execution and by taking all the tough decision needed, as we start doing in H1. Now I will ask Doug to walk us through the H1 financial review.

Doug Osterman, Chief Financial Officer, Stellantis: Thanks, Antonio. So let’s walk through the numbers, starting with the focused financial figures on Page seven, which fully reflect what a tough period it was. Consolidated shipments of 2,700,000 units fell 7%, with declines in North America and in large Europe, slightly mitigated by growth in South America and Middle East and Africa. Net revenue of €74,000,000,000 saw a larger 13% decline as adverse regional mix and lower pricing added to the change in volumes. AOI margins were compressed as the early stage of our recovery actions was negatively impacted by external factors like tariffs and foreign exchange headwinds.

Our adjusted diluted earnings per share generally track our AOI development, and our industrial free cash flow was an outflow of €3,000,000,000 in the first half. While nowhere near our potential, each of these five figures did in fact improve in H1 twenty twenty five compared to the 2024 as we benefited from new products, improved inventory discipline and more stable production schedules compared to the prior six months. Now let’s look at the factors that drove the net revenue decline. The 13% decline year over year was the combination of volume, mix, pricing and ForEx, all presenting headwinds for the period, but some of these factors are evolving in positive ways. First, on volumes.

Consolidated shipments were down 7%, as just mentioned. While materially negative, the first half year over year decline did represent a substantial improvement from the H2 twenty twenty four figure of minus 14%, and there’s encouraging progression within this first half, as the 2025 year over year decline reduced further to 6%. Next, on pricing, which was down 2% in the 2025. That negative 2% figure reflects first a minus 3% in the 2025 and then a smaller headwind of negative 1% in the second quarter. Most of this improvement comes from North America.

Let’s look at the AOI bridge now from prior year. This is a particularly challenging walk considering the H1 twenty twenty four comparison period wherein the company ran at a 10% margin. AOI came in this year in the first half at €540,000,000 with a 70 basis point margin, reflecting the aforementioned volume mix, pricing and FX headwinds. These combined with a €1,600,000,000 increase in industrial costs. Industrial costs were impacted by higher warranty expense and lower volumes that reduced the spread of our fixed overhead as well as a net €330,000,000 of tariff expense.

I think it’s important to emphasize here that the prior year period that we’re comparing to from of 2024 was the last with pricing of the supply constrained era, and the last before a very significant reset in the 2024 to address what at the time were outsized inventories and declining market share. With that in mind, we’re now going to take a look at the sequential improvement in AOI comparing the 2025 to the 2024. In particular, volumes improved sequentially as new product launches helped the European business and North America moved past successful inventory reduction initiatives. Pricing improved 1% sequentially, with North America being the big driver. And it’s encouraging to see industrial costs moving in the right direction as our production schedules became more steady in both North America and in large Europe in the first half of

George, Conference Moderator: this

Doug Osterman, Chief Financial Officer, Stellantis: year. Now let’s turn to industrial free cash flow. Obviously, a very difficult result for the 2025 with €3,000,000,000 in cash outflows. The main reason for this was AOI generation that was simply too low. Even adding back the D and A, this figure was too low to cover our CapEx and R and D spending in the period, but we did manage to lower investment expenditures versus the prior year.

There was also a headwind of €1,300,000,000 of working capital increase due in part to production disruptions related to our initial tariff response. Looking at inventories now, we can see that our corrective actions in 2024 have gotten us back to healthy levels, and as you can see, we’re now maintaining that discipline through 2025. Globally, the trend for the following months should be flattish to perhaps a slight increase, including impacts of ramping the recently introduced B and C segment vehicles in Europe, but also the planned North American launches such as the new Cherokee. Now let’s review a few of the specifics on each of our regional segments. North America and Europe remain in their turnaround phases, but the other regions are delivering very consistent results in the meantime.

In North America, performance was impacted by tariffs as well as from lower fleet performance and improved inventory discipline. In Europe, results reflect 13% lower industry volumes in LCVs, which is a stronghold for us in Europe shrinking but still meaningful product transition gaps and a roughly €500,000,000 provision for a campaign on a 1.5 liter diesel engine. Our results in South America reflect our continued market share leadership, coupled with industry growth in two of the key markets, Brazil and Argentina. And in Middle East and Africa, a couple of notable items. First, we experienced FX headwinds to AOI due to a decline in the Turkish lira that constituted around €600,000,000 But second, and importantly, we continued to have a lot of momentum on the business side, including continued share leadership in Turkey and ramping local production in Algeria.

Moving to our summary financial figures table, let’s focus on the balance sheet for a minute. Industrial liquidity finished the first half at €47,000,000,000 consisting of a positive €31,000,000,000 of cash and liquid securities. That €31,000,000,000 was bolstered by first half bond issuances of €3,600,000,000 In addition, the liquidity figure includes €16,000,000,000 in undrawn committed credit facilities. This puts our industrial liquidity to trailing twelve month revenues at 32%. That’s a little above our targeted range of 25 to 30%, and certainly in a very strong position.

Now let’s just talk a little bit about tariffs. Previously, we had provided a range of 1,000,000,000 to €1,500,000,000 as the expected net tariff expense for this year. With the increased production levels expected in the second half of the year, we believe that we will be at the upper end of that range, or approximately €1,500,000,000. The tariff dynamic, as you know, continues to evolve. We’re of course engaged in discussions with various policymakers and will continue to provide updates as things evolve over time.

As Antonio mentioned in his opening remarks, we are reestablishing financial guidance. With H1 in the books, we want to provide a clear view of how we see the rest of the year developing, and our second half twenty twenty five guidance tells a story of continued improvement. Net revenues are expected to increase half over half, and AOI margin is expected to be in the low single digits. Lastly, we expect improvements in Industrial free cash flow as compared to the 2025. We’re not, of course, anywhere near or close to the full potential of this company, but we’re making the tough decisions and executing on fundamental issues to build on our first half progress in the second half and beyond.

So I’ll now hand it back to you, Antonio.

Antonio Fallosa, Chief Executive Officer, Stellantis: Thank you, Doug. Let’s start with the renewed leadership team at Stellantis, and now we are operating. The Stellantis leadership team I have appointed on my very first day as CEO is made of proven performers, several joining the top team for the first time and others taking on expanded responsibilities. These are leaders that know us, know our brands, know our people and teams, understand our customer and will bring the energy that this moment demands. As a team, we will also take together the tough decision to accelerate the business.

Let me go through some of the actions we have taken already in H1 in detail to give a clear picture of how we are operating moving forward. We made the decision to end our fuel cell initiatives in Europe. Why? Because it was clear that in the absence of any reasonable prospect to develop a market for these products, there is no path to profitability. We have also stopped product initiatives that we understood were poorly suited to customer needs.

At the same time, we are already taking actions to develop and launch products that we know represent a clear opportunity for us. A small but good example of this is the Ram 1,500 Express stream level, very affordable and very appealing to the customer. It will substitute the Ram DS Classic that we have discontinued the last year. It will help for sure regain its share in the entry level light duty truck segment. I said H1 was tough, but I also said we made meaningful progress.

Let me give some details on that. We were able to decrease total inventory by 16% in Europe and North America combined, that is over the last year. Maintaining discipline on inventories, as we have shown from December 24 to June 25, is key to prepare the ground for the great new product launches that are coming very soon. On the combined order books for both regions, North America and Europe, we increased 14% in the last year and 34% in only the last six months, a very good dynamic with our dealers and with our customers. And then in our other regions, in particular, South America, Middle East and Africa, we are delivering very well, showing a combined 6% improvement in AOI from H2 twenty twenty four to H1 twenty twenty five.

At the beginning of the year, we set three priorities: growth, execution and profitability. Let’s see how we are doing. First, growth, where we have an exciting lineup of new vehicles and new powertrains recently launched or on their way. Let’s start with our new products. We have 10 new products for this year, along with several important refreshes or relevant nameplates.

In H1, we launched already four of the new products, including three very competitive B segment products in Europe, the Citro and Citro Aircross, the Opel Frontera and the Fiat Grandepanda. These have been very well received in terms of reviews and in terms of customer orders. And we have much more for the rest of the year. First, three old new Stellar medium products in Europe. Later in the year, we will welcome back some very iconic nameplates with a variety of ICEE, HEV and MHEV powertrains, correcting decisions that removed those nameplates from our lineup for significant periods.

Let me talk more about the three Stella medium products for Europe. These vehicles are exciting midsized cars, each targeting a distinctive customer segment. Their launches also strengthen our platform consolidation strategy since they are all on the Stella Medium platform, which they share already with Peugeot 3,008, Peugeot 5,008 and Opel Grandland. As you know, historically, we have been strong in Europe on A, B and light commercial vehicle segments, but not as strong in midsides. So here is a good example of Stellantis moving to introduce cutting edge products that will boost our market coverage and will accelerate sales.

Moving to North America. We will return with some truly iconic vehicles that have been absent for far too long. This is extremely exciting to us. Let me talk first about the all new Jeep Cherokee. We will begin production in H2 after more than two years of absence.

The all new Jeep Cherokee will mark our return into the midsize SUV segment, the largest segment in The U. S. Industry. And this will happen with a substantially upgraded product with our first ever HEV powertrain and, of course, a full dose of distinctive Jeep design and all terrain capability. Moving to Dodge.

We will begin production in late twenty twenty five. That will be of the exciting ICEE Dodge Charger six pack in both two and four door configurations after nearly two years of absence. This will be critical to reinvigorating our strong connection with the incredible community of Dodge enthusiasts in United States. And much more is coming. To better illustrate what I mean by reconnecting with our customer base and our community, Let me share with you this beautiful campaign.

Enjoy. Last

Video Narrator: year, Ram killed the Hemi v eight, and people had opinions. The same people that killed the Hemi sent me out here with these comments. That’s not happening. We own it, we got it wrong, and we’re fixing it. You hear that?

That’s our Hemi, and it’s saying, I’m back.

Mike Tindle, Analyst, HSBC: Did he say what I think he said? That thing’s gonna hit me.

Video Narrator: You want more? Buckle up. Ram’s coming back to NASCAR. Let’s go, baby. We’re back in America’s motorsport.

The Hemi’s back, and we ain’t going

Antonio Fallosa, Chief Executive Officer, Stellantis: a story about our organization’s ability to take quick, smart, impactful corrective actions. As

George, Conference Moderator: you

Antonio Fallosa, Chief Executive Officer, Stellantis: may know, up to 40% of full size truck buyers will not look at a truck brand unless this brand has a V eight offer. So this one was not a difficult decision. Actually, it was a very obvious one. By acting decisively and quickly, we are reactivating many buyers who have been screaming to have the Emmy back. What is remarkable here is the speed with which the team has been able to move.

In less than ten months from getting the green light, they will have the AME back in H2 twenty twenty five. And the response to our announcement was very, very large and immediate, with more than 10,000 orders placed in the very first twenty four hours. Now let’s move to industrial execution. First, let’s talk about where things are in North America. Here, we are at a relatively early stage of commercial recovery, as most of the new models will come later in the year.

But we have set the stage for our next actions. In particular, as I said earlier, the inventory and ordering dynamics have completely changed in a positive way from the prior year. We now have leaner inventories and a healthier order book with a 90% year over year improvement. REM is showing particularly encouraging early signs with retail sales up 25% in H1, including the benefits of a successful quarter one refresh of the light duty and heavy duty models. But let’s be clear, we still have tons of work to do.

In particular, we are focused on bringing products back to segments where we have been absent, on improving industrial execution, starting with product quality and reinvigorating fleet channels performance. Now let’s move to Enlarger Europe, the other key region for our commercial recovery. Here, we are beginning to benefit in terms of market share from a wave of recently launched products. H1 twenty twenty five market share at 17% is up 1.3 percentage points from H2 twenty twenty four. And I am also very pleased with our progress ramping BEVs and hybrid vehicle sales.

We took the second spot in European BEVs volumes. And for the very first time, we are now number one in European hybrids. As we move forward, several things are priorities for Europe. First, we have to improve the customer experience through elevated product quality, as in North America. Second, we have to improve our industrial execution.

For example, we need to be quicker in ramping the very well received new products, such as the new Fiat Grandepanda. And then, exactly as in North America, we need to increase profitability. So let’s talk about profitability. Here, you may appreciate six sections, among many others, that we have taken or have taken, and I would like to highlight maybe a few of them. We recently announced the return of the SRT division for the North American brands to create the most distinctive high performance products our fans are most passionate about, and this will be accretive to the AOI.

We are also in the process of launching model year 2026 products in North America with evolved, much improved trim lineups, in each case expected to be margin accretive. Finally, in Europe, we will benefit from the full ramp up of our smart car progress. That means higher volumes and higher profits. So before opening to your questions, I will just recap the key points I would like you to take away from this presentation. First, H1 was incredibly tough and nowhere near where we want and we need to be.

But the sequential improvement on issue twenty twenty four is indeed encouraging. It includes the impact of tough decisions, decision that will continue in the second half of this year. Second, we are maintaining the discipline on inventories. We have healthier order books and the product launch cadence is in progress. In Europe, ramping production of new smart car platform models will be a big lever.

And in U. S, we will begin welcoming back iconic products and powertrain, such as the Jeep Cherokee, the Dodge Charger IC and the legendary ME V eight engine. Third, we expect gradual and sequential improvement in the second half. We have established H2 guidance that frames this clearly, and we are intent on delivering against it. One final note.

We are also in the process of updating our long term strategic plan, which we will have the pleasure to present to you at the Capital Markets Day in early twenty twenty six. With that, thank you for your attention, and let’s go to the Q and A.

George, Conference Moderator: Our very first question today is coming from and Jose Asumendi calling from JPMorgan. Please go ahead. Your line is open.

Jose Asumendi, Analyst, JPMorgan: Thank you very much. Jose Asumendi from JPMorgan. Thank you, Antonio, for the comments on Doug as well. Just one question please. I would like to focus a bit more on The U.

S. Market. And I think you’ve provided, I think, compelling arguments with regards to how to get the company back to growth in

Video Narrator: the second half of the year.

Jose Asumendi, Analyst, JPMorgan: Can you talk a little bit more about the levers to improve the profitability? Excluding growth levers, what are the actions you plan to take when it comes to maybe taking down capacity, any restructuring elements, actions you may take also in The U. S? Any actions excluding growth? Thank you.

Antonio Fallosa, Chief Executive Officer, Stellantis: Very well. And thank you for your question, Jose. So as you said, priority number one for Stellantis growth of business will be growth in North America, which is a key market for us. And what are the key actions? Number one, obviously, it’s volumes as well, but we are launching new products that will be all accretive in AOI margins.

For instance, the V eight engine on versions such as the Ram 1,500 TRX will deliver to us additional volumes, as you said, value one excludes, but also accretive margin per unit. Second, the recently signed by President Trump big beautiful bill of July 4 give us more flexibility in choosing better margin optimized mix in between IC version and electrified version of the models that we sell. And this will mean to us a lot of additional profit and also volumes that are much closer to the end customer demand. Third, we are launching now in U. S.

Model year ’26 products, and we are starting from a much healthier inventory situation. That means that we might we will enjoy net price opportunities by doing that. Finally, we are engaging our technical teams in several programs and project of total production cost reduction. Those are technical changes in our Cure and Life products, but also in the ones that are about to launch to maintain the value proposition, decrease technical cost. So those are the four actions that we are, among other, very strong in pursuing, and this is my answer.

Thank you very much.

Patrick Hummel, Analyst, UBS: Thank you, Antonio.

George, Conference Moderator: Thank you, sir. We will now be moving to Patrick Hummel calling in from UBS. Please go ahead.

Patrick Hummel, Analyst, UBS: Yes, thanks. Good afternoon, everybody. Antonio, my first question to you is about the lack of commentary on cash flow and balance sheet strength and your strategic priorities. I get it that the better AOI improves also the cash generation, but it looks like there’s a high likelihood of further cash burn in the second half. And I think it’s fair to say that at least out of the Detroit three players, Celanza’s balance sheet is at least solid by now.

You had a pretty high cash burn on group level of more than or about €9,000,000,000 in the first half. So I wonder, terms of the balance sheet priorities, what are you going to do about it? Can you still keep growing the Finco, which seems to be quite cash absorbing? How should we think about cash returns to shareholders short term and medium term in light of the, well, let’s say, somewhat stretched balance sheet situation? Thank you.

Antonio Fallosa, Chief Executive Officer, Stellantis: Thank you very much. And I will take the first part of the answer, and then I will leave to Doug the rest. So as we said, the first business priority is to grow, right? And that means volume through the expansion of our lineup with the addition of new products that are much closer to customer demands and that are also healthier in terms of margin per unit. By growing volumes, by growing profit, we will automatically grow the top line of cash generation, which is AOI.

Then on the rest, please, Doug, if you want to add something.

Doug Osterman, Chief Financial Officer, Stellantis: Yes. Just to address a couple of different items that you had in there. One, of course, we were encouraged by the fact that the cash burn rate is reducing, right? So we reduced it in about half from what we saw second half last year to first half this year. We expect a significant decrease again in the second half of this year as we chart our path towards cash flow positive operations.

I think that’s a big focus for us in the near future. That being said, we will continue to invest in the business and invest in the product plan. The way to achieve the positive cash flow turnaround is really through a couple of different things. One, of course, the AOI generation of the company and also stabilizing working capital. So if you look at the working capital trend as well, you see more stability in the working capital piece of our cash flows over time.

And so I think, you know, we’re making good progress on this front. In terms of your question about the finco, of course, we’re very excited about the the finco, particularly the growing piece that we have that’s growing so rapidly in The United States and its ability to help us and our customers get into our vehicles, potential to use it as a loyalty tool over time and of course help us connect more closely with our customers and also of course finance our dealers. When we talk about capital though, we also have to recognize that we have inflows from that business particularly in Europe where we get receive dividends. We do of course have outflows as we build the balance sheet on The US finco. You know I think the net of those will be less than half a billion of outflow.

So this year, while it will be an outflow, it’s not a huge drag on the industrial free cash flow at this point. But I think that’s a great business that we continue to see a lot of potential in. So hopefully that answers the different pieces of your

Patrick Hummel, Analyst, UBS: does. And Antonio, if you allow me a follow-up. In terms of your brand portfolio, would the CMD be the event when we get your latest thoughts and your strategy regarding your brand portfolio, which probably many people would expect to see some streamlining?

Antonio Fallosa, Chief Executive Officer, Stellantis: Very well. I thank you again for your second question. So we all realize and recognize with InstaLant is that our large portfolio of very iconic brands is one strength that we have against our competitors, for instance, the new Chinese entrants. And we want to work it better. We want to be more effective and efficient in our brand portfolio management.

That’s why, for instance, you may have observed us recruiting a lot of talents to take care of our brands from the market. So you see, for instance, on Citroen, the new head of Citroen, Xavier. On Peugeot, the new Head of Peugeot, Alain Faber. Then you see Tim Kunisky as Head of all the North American brands. You see Jill Vidal, recently recruited to take care of design for the European brands at the European Design Center, plus David Emile, who is in my top executive team, that will help us in better managing our product portfolio, but also our brand portfolio.

Yes, we are working intensively on that, and all the answer will be provided in the Capital Market Day of quarter one twenty six. Thank you.

Patrick Hummel, Analyst, UBS: Thank you, Antonio. Thank you, Doug.

George, Conference Moderator: Thank you, Richard. We’ll now move to Michael Fodorkidis Please go ahead,

Michael, Analyst, ODDO BHF: Yes. Hi, Michael from ODDO BHF. So one question on Europe. You mentioned in your presentation some price cuts on your side as well as a strong pricing pressure overall. Is it something that you think continues or deteriorates?

And how would you position Stellantis in this environment, meaning that you see yourself as a follower or maybe more an active player given your previous price position, which was too high? Well,

Antonio Fallosa, Chief Executive Officer, Stellantis: no, thank you for your question. So we all know that Europe is a large but complex market for all the automakers, right? But we understand with Eastern Land is that we have turned the corner. For instance, talking of market share now before pricing. You see that the introduction of the new products that have been launched recently and are still in ramp up, they already are growing the market share significantly from H2 to 2024 to H1 twenty twenty five.

We are now at 17% market share. That is 1.6 percentage point better than H2 twenty twenty five. So market share is coming, volume are coming. Second, as profit action, but also volume action, We are now in the phase, in the ramp up of the all new smart car products. They have already a very large bank of orders and we are ramping up the two plants that are producing one in Slovakia, the Citroen, C3 and the Opel Frontera the other one in Serbia, the Fiat Grandepanda.

So what we expect for Europe is in H2 better than H1 in terms of volumes, market share, but also profit generation. On the industry itself, we are observing some deterioration, especially in space that are very important to us, such as light commercial vehicle. And on that, we understand that one key point is also regulation on CO2 emission. For that, we are in constant and productive dialogue with the institution. And we believe that important decision will be taken also to unlock the full potential of light commercial vehicle industry for Europe.

Thank you.

Michael, Analyst, ODDO BHF: Thank you.

George, Conference Moderator: Thank you very much, sir. Next question will be coming from Mr. Stuart Pearson calling from BNP Paribas. Please go ahead.

Stuart Pearson, Analyst, BNP Paribas: Yes. Thank you for taking my question. So I guess for Antonio, to start with, I mean, Stellantis has obviously gone from being the benchmark for profitability in both Europe and North America not so long ago to now pretty much loss making in both and peers are earning reasonable returns. So I mean, you’ve had a front row seat on all of this. I mean, what’s your diagnosis of what’s gone wrong?

And what kind of response should we expect from you? I know we’ve got to wait for the CMD. But I mean, when we look at what you’re saying today, it looks like more the same. That might be unfair, but more incremental actions. But I wonder, are you considering anything more radical that you think might be required to get the company back to benchmark levels?

And maybe just linked to that possibly for Doug, just on the restructuring charges and exceptional items, we’ve had GBP 3,000,000,000 on average now over the last five years, another GBP 3,000,000,000 in H1 this year. I mean, what can you say about H2 as things stand today? Do we expect anything more there? And then when will those continued charges perhaps finally moderate? And then maybe to finish a request, Doug, perhaps now the financial services is becoming such a bigger part of the business, we could get some separate disclosure between industrial and the Finco.

And I’m sure there’ll be lots to look at and analyze there. Well,

Antonio Fallosa, Chief Executive Officer, Stellantis: thank you for your question. I will take the first part, and then I will hand to Doug for the second part. So the first part, the diagnosis, both in Europe and North America. Well, diagnosis itself is large and complex, but for sure, one important root cause of our market share deterioration, both in North America, especially, but also in Europe, is the fact that in the past, we decided to phase out many important, relevant and successful nameplates. For instance, in North America, U.

S. Specifically, we phased out seven successful nameplates: Jeep Cherokee, Jeep Renegade, Chrysler 300, Ram DS Classic, Ram Promaster CD, Dodge Charger, the muscle car of the past Dodge Challenger, SIM family. Those seven nameplates were granting to us 300,000 units per year sold and several billions of gross commercial result per year. So now we are restoring that lineup. Jeep Cherokee is coming, much improved than the previous one with two years of absent but coming strong.

The powertrain that we have discontinued in the past, they are coming back, starting with the legendary MEV8 engine has been shared before. This means volumes and this means margin per unit. And also in Europe, we are correcting some initial all in BEV powertrain decisions into multi energy offers to our customer because we believe that both in North America and in Europe, to be multi energy means to be closer to the real customer demand. Then on the rest of the question, I will leave Doug answering.

Doug Osterman, Chief Financial Officer, Stellantis: Okay. Thanks, Antonio. So just to address the other pieces of the question. When you talked about onetime charges, when we look at the $3,300,000,000 of onetime charges that we saw in the first half. As I’ve mentioned in my comments on the twenty first, roughly $2,000,000,000 of that, I think, represents some tough decisions and changes in strategy that have been made by this new management team.

Antonio certainly mentioned one significant one, which was our decision to stop our investment continued investment in fuel cell programs in Europe. But there are other shifts in strategy that are all a part of that number, including some restructuring as you mentioned in your question itself. In terms of now there are other factors built in there, changes in our environment. For instance, there’s some recognition of the changes of the one big beautiful bill passed in The United States that impacted cafe fines and the like. So there’s some certainly I think the majority of it represents us getting after those tough decisions and changes in strategy but there are also some pieces related to changes in our environment.

In terms of we don’t typically forecast kind of one time items for the future. But looking forward, given that I think the new management team still has a fair amount of work to do in looking at our strategies and preparing for all the announcements that will come forward on the Capital Markets Day, we could see other strategic shifts that could lead to onetime charges in the second half. And then on Finco, there is a lot of disclosure on the financial services piece of the business as opposed to the industrial piece in the six ks. But I think you raise a good issue, which is something we’re always looking at is at what point will that piece of the business be so large that we need to maybe break it out as a separate segment, etcetera. But that’s something that we look at kind of every quarter and think about.

But I would say there is a lot of disclosure in the six ks and offline, obviously, I’d be happy to have a session with you to walk through some of that.

George, Conference Moderator: You very much, sir.

Patrick Hummel, Analyst, UBS: Thank you.

George, Conference Moderator: Next question will be coming from Mr. Steven Reichman of Bernstein. Open, sir.

Ed Ditmeyer, Head of Investor Relations, Stellantis0: Yes. Good morning. Could you talk about your relationship with The U. S. Dealers?

Obviously, that was a significant issue leading up to the whole blow up twenty four. Can you comment on the kind of any metrics you have in terms of how the confidence and trust of the brand has been changing since management changes? Thank you very much.

Antonio Fallosa, Chief Executive Officer, Stellantis: Very well. Good morning and thank you for your question. Well, since January, myself and my team committed in a much better dialogue with our dealer network, especially in U. S, but not only. And good things are starting to come.

For instance, the new versions of RAM that I mentioned in my presentation, the RAM 1,500 Express, is basically an idea that came out of our team that deal with the brand talking to the dealers. We have decided to discontinue more than one year ago Ram DS Classic that was attacking the entry level of Ram of Light Duty segment in U. S. And now this version that, again, came out from a constructive dialogue of the network with the brand team is now restoring our presence there, and we see good orders coming in. And when you ask what is a quantitative indicator of this restored confidence, I must say that the order inflow is one of those.

So our order book, mainly driven by retail orders, thus our dealer network, grew more than 90% year over year. And this is a clear demonstration that confidence, which is an enduring process to build day by day through relationship and also through good business, through good mutual business while it’s coming back. Thank you.

George, Conference Moderator: Thank you. You. You’re welcome, sir. Next question will be from Mr. Philippe Houchois calling from Jefferies.

Please go ahead.

Ed Ditmeyer, Head of Investor Relations, Stellantis1: Thank you and good afternoon. My question is on the guidance you gave us on free cash flow in the second half. Improvements, yes, that’s fine. It doesn’t give us a sense whether the H2 might compensate for what happened in the first half. And what struck me is maybe a certain reluctance to guide on working capital.

I would expect there’s an improvement in volume coming in the second half that usually does wonders to for working capital or cash inflow generation. So is that just reluctance on your part or lack of visibility? Or is there an obstacle or reason why there wouldn’t be a meaningful inflow? And I appreciate it may not be the same as earnings in terms of quality, but meaningful inflow of cash from working capital. And then kind of supporting that, wondering, we know about the Express, we know about the Hemi coming back on the Ram.

But when do we actually see those numbers meaningfully? I mean, can I see a Ram V eight in the dealership in The U? S. Right now, having been in a few months? Or is that coming later?

Where are we in the restock or the the supply chain? Are we in production? Are we delivering to customers or just the dealers? If you can give us a sense, that would be helpful.

Antonio Fallosa, Chief Executive Officer, Stellantis: Well, thank you for your question. I will take the first part and then I will give the technical answer to that. So let’s start. First of all, of Industrial cash flow, but generally speaking, on the progression of result that we are committing to in our guidance. We need to understand and to remind ourselves that we closed at H1 nearly breakeven, right, in AOI, for instance, and with the free cash flow, the outflow that you saw.

And in H2, we will have the highest portion of impact of tariffs in The United States, which I believe in H2 only will be in around €1,200,000,000 That means that through the additional volumes driven by the launches, through the accretive profit per unit that those launches, but also the cost action will deliver to us, we need to offset those impact, and we are committed to accelerate. So it’s not reluctance. Actually, it’s considering that Alpha one was in the numbers that you saw. And Alpha two, the way it has been expressed in the guidance, represent a very relevant acceleration, which we intend and commit to do, but also to go forward in the next years. On the RAM launches that you mentioned, so on V eight, for instance, after green light, the team was unbelievably quick and fast in delivering the full development and the manufacturing adjustments in less than ten months.

So we will have very soon start of production thus, you will see both the V eight versions, but also the Express version by quarter four mainly in the dealers of this year. Doug, the rest?

Doug Osterman, Chief Financial Officer, Stellantis: Yes. On your question on cash flow and working capital, I agree with some of your comments. It’s a tough period in which to forecast a business, I’m sure, as auto analysts, all of you on the call can relate. As I mentioned, there are some significant external headwinds. We saw in the first half about EUR 1,000,000,000 impact to our AOI just from changes in FX, right, with you know, the the value of the euro changing against currencies like the the Turkish lira, the Brazilian real, you know, Argentinian peso, etcetera.

So those things are very tough to forecast as well as tariffs. The tariff impact has moved substantially and we’re still getting more updates on tariff negotiations that could impact those numbers. And they’re big, right? We talked about the full tariff impact for the year. Right now, our estimate is 1,500,000,000.0.

So it’s difficult to be too definitive on a lot of these figures. In terms of working capital, you’re right. Of course, with increased volumes in the second half, we would expect that to be positive for working capital. But one thing to keep in mind of course is that what really has a big impact from production and working capital is because of the payment terms that we have in this business is really your production kind of in the last six to eight weeks the period. And so when we look at that dynamic from midyear where we run-in the last two months of the first half versus year end because of the year end holidays around Christmas, etcetera, we oftentimes have some downtime.

It’s tough to see significant improvement from, you know, the end of where kind of how we run end of first half versus end of second half. But in general, you’re correct. In general, with increased volumes, we should see working capital at least mitigate and balance out, if not potentially be a positive.

Stuart Pearson, Analyst, BNP Paribas: Thank you.

Doug Osterman, Chief Financial Officer, Stellantis: Thanks for

Jose Asumendi, Analyst, JPMorgan: your question.

George, Conference Moderator: Thanks a lot, sir. Sorry to interrupt you. Our next question will be coming from Thomas Besson calling from Kepler Cheuvreux. Please go ahead.

Ed Ditmeyer, Head of Investor Relations, Stellantis2: Thank you. I’d like to come back to your guidance, please. Is it fair to say that you’re trying to be conservative for the second half as you should be able to produce normally for the first time in a long time without downtime for tariffs or without having to substantially cut your inventories? Or is that lots related to the USMCA uncertainty or the willingness not to have to warn again? And to follow-up on Philippe’s question on free cash flow, is it fair to assume that H2 CapEx has little reason to rise sequentially?

Antonio Fallosa, Chief Executive Officer, Stellantis: Thank you for your question. And as I mentioned a little bit before in my previous answer, Yes, we need to consider that H1 was basically breakeven for our business. And we are committed to drive the business into a gradual sequential improvement that needs to be evident quarter by quarter in all our business KPI, that means AOI, industrial free cash flow generation, volumes, shipments, etcetera. So this is our commitment. And considering that, as Doug said, around $1200000000.01300000000.0 euros of the overall €1,500,000,000 of initially estimated tariffs, if things don’t change, will be paid in the second half.

This is a commitment, I would not call conservative, but we are very committed to do that as we are committed to transition in acceleration into the next year and keep going. Tad, if you want to take the technical part of the answer.

Doug Osterman, Chief Financial Officer, Stellantis: Yes. No, I think that’s exactly right, Antonio. When we think through the dynamics first half versus second half, we think about where we can guide the business and where we see the business performing. I think we can step up production. I think we can make progress on volumes.

I think we can make progress on pricing, particularly in The United States. I think a lot of the pre tariff vehicles that were on dealer lots are running out. I think we’ll see industry dynamic that should be supportive of pricing. When we look at, you know, industrial, of course, our fixed costs will spread a bit better with the higher volumes. But there are significant headwinds as well, right, because we only paid, as Antonio outlined, $330,000,000 of the expected 1,500,000.0 was impact in the first half.

Part of that is just because the timing of when the tariffs came in, right? But but, yeah, we’re we’re looking at a step up in that expense from, you know, 330,000,000 to more like a a billion plus in the second half. So that’s a significant headwind for us. Now offsetting that, we also should be able to run a richer mix that probably more aligns much better with customer demand that we see in The United States with CAFE fines going to zero. That’s going to be a positive, but there’s certainly, you know, a lot of headwinds still to be handled in the second half.

I think our guidance is reasonable and achievable, but certainly there are challenges in meeting it.

Antonio Fallosa, Chief Executive Officer, Stellantis: Thank you.

George, Conference Moderator: Thank you, sir. Our next question will be coming from Itay Michaeli of TD Cowen. Please go ahead.

Video Narrator: Great. Thanks. Good afternoon, everybody. I was hoping we could dig in back to North America on fleet sales and maybe if you could quantify the impact in H1 and give us a bit more detail about some of the action plans you have to improve fleet sales, how we should think about timing and potential impact to both top line as well as bottom line? Thank you.

Antonio Fallosa, Chief Executive Officer, Stellantis: No, very well. And thank you for your question. I believe that we can quantify the overall impact of lower fleet sales that has been a decision driven by profit optimization of logics in around May of market share, overall market share in North America. And what we are doing is, number one, we have recruited from the market a very strong leader to handle the team, to manage the team. He comes from the field.

His name is Michael Ferreira. And immediate took action and decisions on changing our strategy in fleet sales. For instance, as you know very well, fleet sales is divided into three, I would them subchannel, the Rent A Car, the Commercial, that means Small and Midsize business and the Governmental. We were too much focused on rent a car also because the constrained era of semiconductor was delivering high volumes and a very decent margin. Now with the new leadership and the new team, we are diversifying our offensive in fleet into the three channels, also putting a lot of effort in governmental and putting a lot of effort in commercial that are both higher margin than Rent A Car.

We expect up to already initial growth and a partial recovery of what we lost. And obviously, we expect to accelerate as we transition in the next year. Thank you for your question.

George, Conference Moderator: Thank you. Thank you, sir. We’ll now be moving to Mike Tindle of HSBC. Please go ahead.

Mike Tindle, Analyst, HSBC: Yes, thanks. It’s Mike Tindle from HSBC. I wonder if we could just talk a bit about tariffs and about Mexico and what are you hearing? Obviously, we’ve seen trade deals around the rest of the world, but we haven’t heard much on that front. And then within that question, what does it mean to the economics of the new Cherokee?

Because if I’m not wrong, that’s going to be built in Mexico. Does that product work under the new tariff structure? And if not, is there what can you do to kind of compensate for that? Thanks.

Antonio Fallosa, Chief Executive Officer, Stellantis: Very well. Very well. Thank you for your question. So tariffs. It’s a little bit a long answer, but I will try to be short.

So number one, since day one, we understand and we support the general strategy of President Trump’s administration to boost job creation and U. S. Production, both in the automotive OEM, but also in the automotive suppliers using also tariff as a tool. And we want to support this strategy. Second, we are in a very constructive dialogue with American institution and policymakers as well as with the Mexican and Canadian institutions and policymakers.

Now we are observing a phase when tariffs have been negotiated, U. S. With individual countries or group of countries, right? And what we understand is that we need to to request. We would like to request to properly recognize the high American US content in some vehicles.

Just to make numbers, U. S. Industry is around 16,000,000 units of cars sold per year. 8,000,000 of those 16,000,000 units are built in U. S.

Plants. So obviously, they carry a very high U. S. Content. 4,000,000 are built in Mexican and Canadian plants, but they use a lot of components coming from U.

S. Suppliers. So also those units carry a lot of U. S. Content.

Finally, 4,000,000, they come from Europe, they come from Asia, and they have virtually zero US content. So what I believe should be done is to recognize also using the tariff setup that the American bills, but also The U. S. And the Mexican and Canadian bills, they carry a lot of U. S.

Content. And by the way, we salute the flexibility that has been recently introduced by The U. S. Government and institution into the tariffs of Mexico and Canada, the expanded U. S.

Content, for instance, or others, tax offset credits. On the Cherokee, you are right. The Cherokee has been built has been developed and will be built in Mexico to start. And we are working a lot in transformation cost and also on total production cost with technical studies and projects to decrease the cost of the platform, the components and the overall top hat and vehicle in order to boost profitabilities. It will come with large volumes because we understand that it is a key move of returning into the largest U.

S. Segment in the industry, 3,600,000 units sold in the midsize SUV segment, which is the equivalent of the entire Germany industry, just to make an example. And we need to work on costs, we are doing that to increase profit, we can totally offset the tariff effect. That is my answer. Thank you very much.

Stuart Pearson, Analyst, BNP Paribas: Thank you.

George, Conference Moderator: Thank you, Mr. Constraints, that was our last question for today’s conference. I’d like to hand the call over to Mr. Antonio Filosa to conclude this call.

Antonio Fallosa, Chief Executive Officer, Stellantis: you. Thank you very much, George, for your help today. Thank you very much. And thank everybody for your time and focus on the Stellantis story. I look forward to updating you on our progress in the coming months and in Capital Market Day that we will held in quarter one twenty twenty six.

Thank you. See you later. Bye bye.

George, Conference Moderator: Thank you. Thank you very much. Ladies and gentlemen, that will conclude today’s conference. Thank you for your attendance. You may have disconnect.

Have a good day and goodbye.

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