During the commentary and Q&A sessions, Richard Palmer CFO (FIAT/FCA/Stellantis) part of the original years of Sergio at FIAT made several comments and obviations during the Call:
Palmer STRONGLY hinted new round of record profits were archive during Q1 2022 fiscal quarter pointing out that half of the 4.8 billion Euro revenue increase in North America (20.7 billion Euro Q1 2022 VS 15.9 billion Euro Q1 2021) went to the EBIT/Operating profit line.
Keep in mind this the French reporting schedule, where mid-year Earnings and Full-Year Earnings with no Quarterly Earnings. Instead of Quarterly Earnings, there's Revenue & Sales Conference Calls. The French Government under Macron believes this reporting schedule increases focus of management on the long-term of the business (remains to be seen).
*Palmer stated the Wagoneer lineup hasn't fully launch as the company has prioritized higher levels of the Grand Wagoneer. Palmer mention there are areas of the segment (Full-Size SUV) in which Stellantis isn't participating in but are highly profitable, and highly important to volume but is satisfied with the rollout so far given the ''very high prices points' and the positioning.
*Palmer praise the Grand Cherokee L success in every particular way from the pricing generated, sales generated , and new ''opportunity '' for the Jeep brand in serve in while drawing higher interest into the overall Jeep brand.
About 100,000 Grand Cherokee deliver during Q1 2022 (both WK and WL), and increase beyond that quarterly rate by Q4 with the full WL lineup launch..
*Discontinuing Grand Caravan +Journey while adding the Grand Cheroke L, Grand Wagoneer and Wagoneer greatly improved mix Y-O-Y in ever measure of Mix further adding to a strong North American lineup.
*In terms of the U.S. Consumers and higher interest rates impact, in a response to an analyst question Palmer stated the bigger risk is Used vehicles market in all three areas of volume/resale values/''tradedown'' especially if supply comes back to new vehicles. Palmer did state given the high amount of a Stellantis North America transaction is financed (.vs down payment/trade-in), a tradedown in features/trim levels/options/content is a risk if interest rates rise too aggressively, but Palmer then point out the company currently have strong lineup in North America, focus on manage expenses and currently enjoy low inventory(benefit of a supply shortage). Palmer pointed out the Stellantis profitability in North America being superior vs GM & Ford North America.
*Palmer admitted that since his involvement with North America business (Chrysler's Bankruptcy) selling Jeeps in the lower-end segments have been a challenge in North America while Jeep is having strong performance in the higher-end segments in North America. However, Palmer did state the Compass update has been positively received so far in the North American market while raising the importance of getting Jeep brand right in the lower-end segments so buyers can graduate within the brand creating loyalty to Jeep for life.
*In North America they learning to live on strongly without steady chip shipments as the revenue demonstrates , Europe will continue to be impacted more by chip shortages.
*In response to question of former profitability FCA Europe , Palmer pointed out to the merger savings , and tied them to capital spending that standalone FCA otherwise would have spent in Europe. He pointed out over the next 18 months there will EX-FCA branded models being launch in Europe alongside EX-PSA branded models which will be very efficient in addition to gains with purchasing savings.
*On a question about marketshare in North America, Palmer made clear that the number One driver of decisions and the most important number in North America is MARGINS,and they are not concern with marketshare in North America. Palmer made clear Margins = Cash Generation (creates Shareholder Value, allows the Company to run through the new vehicle/economic cycle, responsible invest in capital in the right products).
Palmer stated products are priced to make the profitability. Palmer stated having different brands in different segments, very focus where buyers know what the particular brand does do, and what that brand doesn't do is a positive advantage for Stellantis. Palmer went to state following about the brands in North America:
*Dodge has a very clear mission in muscle, does very great job at that mission and has very good margins
*RAM success & growth in every measure since Chrysler Bankruptcy and split from Dodge should clear to everybody
*Jeep is continuing to move forward
*Says Chrysler brand is a very interesting opportunity, there's more to share once Stellantis work through the brand positioning
*Palmer did say nothing about the FIAT brand in North America.
Finally there were a basket of questions related to Improving the stock price of Stellantis including get getting rid of the French Reporting schedule (in favor of reporting quarterly reporting like GM and Ford ),buying back
stock, splitting Stellantis up either through spinning-off the European Business, or creating an ''ICE/OLD Stellantis'' or ''Stellantis 2.0/BEV & New Tech Stellantis''. Palmer threw cold water on all the above, but did state they are not happy with the stock price and new to do a better job communicating & driving interest among investors.
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