Stellantis Earnings: Revenue Rises on Volume Increase, Solid Pricing, and Favorable Mix

No-moat-rated Stellantis STLAM reported first-quarter revenue of EUR 47.2 billion, rising 14% from EUR 41.5 billion reported in the prior year when the chip crunch was much worse. Excluding favorable currency, organic revenue rose 13%. The top line beat the FactSet consensus estimate of EUR 45.9 billion by 3%. Stellantis’ volume, still affected by the chip shortage but to a lesser degree, and favorable mix contributed 7 percentage points to the revenue increase and vehicle pricing added 6 percentage points as average revenue per unit edged 5% higher. The revenue increase outpaced a 7% rise in consolidated unit volume to 1.5 million from 1.4 million last year. The automaker (French domiciled for accounting purposes) discloses only revenue in the first and third quarters.

Management’s unchanged 2023 guidance reflects alleviating chip shortage and stable economic conditions. The company expects mid-single-digit volume improvement in most of its regions. The firm forecasts double-digit adjusted operating income margin and positive free cash flow. We estimate 2023 revenue of EUR 184 billion (up from 2022 revenue of EUR 180 billion) and AOI margin at 12.7% (down slightly from 13.0% in 2022) due to continued healthy pricing, less output disruption, and cost reduction, partially offset by mix becoming more unfavorable as the year progresses. We remain concerned about a possible recession in major auto markets, the Ukraine war, and chip availability. The 5-star-rated shares of Stellantis currently trade at a compelling 62% discount to our unchanged EUR 38 fair value estimate.