Stellantis Q2 earnings return to profit, but shares fall

Stellantis Q2 earnings showed the Jeep maker returning to profit, helped by stronger demand in North America. For everyday investors, the stock reaction was the sharper part of the story: shares traded in Milan fell after the profit figure came in alongside operating income that missed analyst expectations.

The automaker reported second-quarter net profit of 293 million euros, equal to about $335.3 million, according to its financial results release. That compares with a net loss of 1.87 billion euros in the same period a year earlier.

Stellantis owns a wide lineup of auto brands, including Jeep, Dodge, Fiat, Chrysler and Peugeot. The company’s return to profitability came as CNBC reported rising North American demand and early signs that CEO Antonio Filosa’s plan to improve performance may be gaining some traction.

Why did Stellantis shares fall after Q2 earnings?

Investors focused on profitability beneath the headline net income number. Stellantis said adjusted operating income rose to 773 million euros in the April-to-June quarter, up from 213 million euros a year earlier, but that still fell short of the 914 million euros expected by analysts in a Reuters consensus estimate.

Adjusted operating income is a company’s profit from its core business after certain items are excluded. Investors often watch it because it can give a cleaner read on how the main business is performing, especially for a global automaker dealing with changing demand, costs and regional sales swings.

CNBC reported that Stellantis shares initially dropped more than 8% after briefly failing to open Thursday morning. The decline later eased, with the stock last seen down around 5%.

The share move shows how earnings reactions can depend on more than whether a company reports a profit or a loss. A return to profit was positive compared with last year’s loss, but the miss versus Reuters’ operating-income estimate gave investors a reason to mark down the stock.

What Stellantis reported

• Second-quarter net profit: 293 million euros, or about $335.3 million, according to Stellantis.
• Year-earlier result: net loss of 1.87 billion euros.
• Adjusted operating income: 773 million euros, up from 213 million euros a year earlier.
• Reuters analyst consensus for adjusted operating income: 914 million euros.
• Share reaction: Milan-listed shares fell more than 8% at one point before paring losses to around 5%, according to CNBC.

The report marks an early test for Filosa, who is trying to improve results at one of the world’s largest automakers. North America remains a key region for Stellantis because brands such as Jeep, Dodge and Chrysler are central to its business there.

This story draws on original reporting from CNBC.