Stellantis operating profit rises as cost cuts gain traction

By Giulio Piovaccari and Gilles Guillaume

MILAN, Oct 28 (Reuters) - Stellantis posted a rise in third-quarter operating income on Wednesday and said its cost-cutting program was gathering pace, supporting expectations for a stronger fourth quarter and sending the automaker's shares up over 6%.

The Franco-Italian group said its Value Creation Program, a group-wide cost and efficiency plan that CEO Antonio Filosa launched this year, was ramping up rapidly, with visible benefits in the third quarter.

"We remain on track to implement at least 40% of the total €6 billion in run-rate efficiencies by the end of this year," Filosa said in a statement.

The Fiat-to-Jeep maker said it expected to make savings in the fourth quarter in the "mid-hundreds of millions of euros", or around €500 million ($556 million), approximately double the amount realized in July-September.

"This is the only obvious support to Stellantis adjusted operating margin recovery," Citi analysts said in a note.

The group's Milan-listed shares were up 5.8% by 0950 GMT, having risen as much as 6.2% earlier.

Stellantis also confirmed its 2026 forecasts and a closely watched target to return to positive cash flow generation in 2027.

BATTLING TWO YEARS OF FALLING SALES

Following two years of sliding sales and profitability, Filosa in May promised dozens of new models, cost cuts and deeper cooperation with Chinese partners as part of a new business plan through 2030. 

However, investors still need to be convinced that the automaker, which in February announced EV-related impairments of more than €22 billion, is on the path to sustained recovery. 

The group still recorded an industrial cash outflow of €4 billion in the third quarter.

Earlier this month, Stellantis shares sank to their lowest level since the group's formation in early 2021 through the Fiat Chrysler-Peugeot merger.

STRONGER PERFORMANCE EXPECTED IN FOURTH QUARTER

In the third quarter, Stellantis' adjusted earnings before interest and taxes rose to €256 million, from €90 million a year earlier.

That was above a forecast of €191 million from a Reuters poll of analysts, who were bracing for a weak quarter before an expected stronger performance in the final part of the year.

Third-quarter revenue was little changed at €37.6 billion, with slight increases in Europe and South America and a 3% drop in North America, which has historically been Stellantis' most profitable market.

Stellantis also announced on Wednesday it would present a new business plan for its struggling Maserati luxury brand on December 10.

($1 = 0.8993 euros)

(Reporting by Giulio Piovaccari in Milan and Gilles Guillaume in Paris; Editing by Alvise Armellini and Emelia Sithole-Matarise)