Wednesday 3 March 2021 8:29 pm

Peugeot and Fiat owner Stellantis nets profit boost after mega-merger

Stellantis, formed through the merger of Peugeot-maker PSA and Fiat Chrysler (FCA), tonight reported better than expected earnings, after low global car inventories and cost cuts kept profits high.

Stellantis aims to deliver over €5bn a year in savings through the merger, as well as bulking up to face industry challenges.

Combined adjusted earnings before interest and tax (EBIT) amounted to €7.1bn at the group last year. At the end of 2020, combined liquidity stood at €57.4bn and free cash flow at €3.3bn.

According to reporting by AutoMotive News Europe, Stellantis is targeting an adjusted operating profit margin between 5.5 per cent to 7.5 per cent this year. In comparison with last year, where a margin of 5.3 per cent was achieved; 4.3 per cent of which was at FCA and 7.1 per cent at PSA.

The group said 2021 results should be helped by three new high-margin Jeep vehicles in North America and a strong pricing environment there. The US market has driven profits for years at FCA and starts off as the strongest part of Stellantis.

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Stellantis is now the world’s fourth largest carmaker, with 14 brands including Opel, Jeep, Ram and Maserati, and like its peers, it is struggling with a shortage from investments in electric vehicles.

CEO Carlos Taveres commented on the goal of the merger and the possibilities available to Stellantis.

“This is a merger that is going to open new opportunities for a company that is sound, with talented people, who do not want to be cornered in a legacy or a dinosaur position.”

The group is now working through reorganizing some of its factory set-ups, though it has pledged to close no plants, and finalizing new management teams.

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Priorities for Stellantis in 2021 also include defining a strategy for China, where some Stellantis brands have struggled more than rivals.

Tavares, who previously ran PSA, achieved an improvement in margins at the French carmaker by cutting costs, simplifying its vehicle line-up and delivering synergies on its purchase of Opel/Vauxhall, a strategy investors hope he can replicate.