Stellantis unveiled a share buyback of as much as 1.5 billion euros ($1.6 billion) following Mercedes-Benz and BMW in returning cash to shareholders after strong 2022 results on the back of high vehicle prices and pent-up demand.
Stellantis expects another year of double-digit returns as vehicle price increases slow, chip shortages ease and production picks up, it said Wednesday.
The company’s operating return rose to 13 percent last year, beating expectations.
“Price increases were substantial in 2022 and they will be lower in 2023,” Chief Financial Officer Richard Palmer said on a call with reporters. “The challenge for 2023 is to offset inflation with pricing but also with an improvement in the industrial efficiency.”
The group, formed from the merger of Fiat Chrysler and PSA Group, will pay a dividend of 1.34 euros a share, up from 1.04 euros the previous year.
The buyback will run through the end of the year.
Returns during the second half of 2022 declined compared to the first because of the supply-chain snarls. Adjusted earnings before interest and tax (EBIT) were 10.95 billion euros in the July to December period. The margin was 12 percent in the second half, down from 14.1 percent in the first six months.
Stellantis said all of its regions were growing and delivering record profitability, including Europe.
Palmer said vehicle shipments for the group fell 2 percent last year, mainly due to issues with its supply chain, notably with semiconductors and logistics, especially in Europe.
“Challenges continue in securing capacity for (vehicle) outbound transportation (to customers),” he said. “Semiconductors continue to be a problem, I do not think the situation will be fully resolved in 2023,” Palmer said.
Stellantis said it had so far made cash synergies of 7.1 billion euros. That places it two years ahead of schedule in its target to reach annual cost savings of 5 billion euros.
Automakers are still struggling to source enough parts, with logistics problems adding to the fray to delay deliveries. Truck driver and train shortages during the second half left thousands of cars stuck around at Stellantis’s Sochaux plant in eastern France, with peer Volkswagen also reporting that disruptions left it with a glut of unsold vehicles.
The difficulties in getting vehicles to car buyers are adding to manufacturers’ already long order books they say will buffer against a slowing global economy.
While price cuts at automakers including Tesla and Ford on EVs do not bode well for the months ahead, Stellantis rival Renault this month said it expects rising returns after overhauling its model offering.
Reuters contributed to this report