Stellantis' top level shake-up fails to stem share slide

Reuters

Stellantis' top level shake-up fails to stem share slide

10:10 sáng giờ GMT, 11 Tháng 10 2024

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CEO Tavares to retire in 2026

CFO, North American chief replaced in reshuffle

Moves follow profit warning last week

Tavares due to speak in Italian parliament at 1300 GMT

Shares down 3.8%, around 45% drop year to date

Adds investor comment paragraphs 3, 4, 10, 11, chairman comment paragraph 9, context paragraph 5, Tavares in Parliament paragraph 14

By Giulio Piovaccari

MILAN/LONDON, Oct 11 (Reuters) -Shares in French-Italian automaker Stellantis STLAM.MI resumed their decline on Friday after the carmaker said CEO Carlos Tavares would retire in 2026 and announced wide management changes which failed to lift sentiment.

The moves came after the owner of brands including Peugeot, Fiat, Jeep and Ram last week cut its 2024 profit forecast, with an estimated cash burn of up to 10 billion euros ($11 billion) this year, and signalled possible reductions to its dividend and share buybacks in 2025.

Fabio Caldato, a portfolio manager at AcomeA SGR, which holds Stellantis shares, said management, after years of success, had been slow to adapt to recent fluctuations in the automotive market.

"Complacency was their sin," Caldato said. "They were slow to react to a worsening of the market landscape. That's why the management reshuffle had to be so deep".

As part of the reshuffle, Stellantis replaced its CFO Natalie Knight, who took the position just over a year ago, and the head of its North American business, the group's profit powerhouse but now at the core of its financial struggles, giving the job to Jeep brand Chief Antonio Filosa.

Its Milan-listed shares STLAM.MI were down 3.8% at 0955GMT, its lowest since July 2022.

RBC analyst Tom Narayan said in a note it was unclear how the management changes would reverse trends around Stellantis' issues rooted in too-high pricing in North America and high dealer inventories,

"Further, we believe these decisions on top of Mr. Tavares' retirement in 2026 add more uncertainty for Stellantis' prospects," he added.

Chairman John Elkann, Stellantis' single largest investor through the Agnelli family holding company EXOR EXOR.AS, said late on Thursday Stellantis' board unanimously backed Tavares, cutting speculation of an early ousting of the CEO.

AcomeA'sCaldato, however, said Tavares had achieved outstanding results with Stellantis but this was time for radical change.

"I think the management reshuffle should also have targeted the commander in chief," he said.

Including Friday's move the Milan-listed stock has dropped around 45% year-to-date, lagging its European rivals.

"We believe that things may have to get worse before they improve," brokerage Banca Akros said in a note.

Tavares is due to appear later on Friday before the Economic Activities Committee of the Italian parliament in Rome to discuss the state of the country's automotive industry.

The confirmation of his retirement plans came shortly after Stellantis said he could remain after his contract expires. The world's fourth-largest automaker by sales said it now planned to name his successor by the fourth quarter of 2025.

Analysts at JPM said the shake-up provides visibility with regard to the management structure and a clear commitment to find a successor for Carlos Tavares.

Tavares, an avid race car driver who was widely heralded in prior years for making Stellantis one of the world's most profitable automakers, has led the company since its creation through a 2021 merger between Fiat-Chrysler and Peugeot maker PSA, where he had been board chair since 2014.

($1 = 0.9132 euros)

Stellantis shares lag rivals https://tmsnrt.rs/3Yhgl7U

Stellantis: Operating income margin forecast https://reut.rs/4ds5CMg

Reporting by Romolo Tosiani and Giulio Piovaccari, editing by Elaine Hardcastle

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