Stellantis N.V.

Hello and welcome to Stellantis' full year 2023 results. I'll now hand the call over to our host, Ed Dittmeier, Head of Investor Relations, to begin today's conference.

Thank you. Hello, everyone. Thanks for joining us today as we review Stellantis' full year 2023 results. Earlier today, the presentation material for this call, as well as the related press release, were posted under the Investors section of the Stellantis Group website. Today, our call is hosted by Carlos Tavares, the company's chief executive officer, and Natalie Knight, the company's chief financial officer. After both Mr. Tavares and Ms. Knight present, they will be available to answer questions. Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor Statement included on page 2 of today's presentation. As customary, the call will be governed by Dutch language. Now, I would like to hand over the call to Carlos Tavares, CEO of Stellantis.

Thank you, Ed. And good morning and good afternoon to all of you. Nathalie and myself, we are delighted to host this session, the Stellantis 2023 Financial Results Announcement Session. We know that you are very busy people and therefore we value your time and we thank you warmly for your interest in Stellantis. Let's get started. First of all, 2023 was one more record year for our company. A record in net revenues, plus 6%, a record in net profit, plus 11%, and a record in free cash flow. Plus 19 percent. So a record year in, of course, a very agitated year that demonstrated once again that we are a highly resilient company. We are an all weather company, as I'm sure you already know. We are so happy to be here with you today to comment. what has been done, and to answer your questions. It is fair to say that not only we were able to go through a very agitated year with record results, but we have demonstrated to you that we are ready for the future. We are executing our transformation. We are doing what we have told you, what we have explained in the Therefore 2030 plan, and we are ready. We are ready for 2024, and we are ready for the next steps of our transformation, and we are ready with a very, very flexible capability. And this is, I'm sure, something that we will discuss, all of us, today. So from here, I would like to move to the second slide, which is about a real game changer. And I'm focusing on this specific game changer, which is the car you have on the screen, the brand new eC3 from Citroën. This is a B hatchback. Pure BEV that is now going to be sold in the European market at 23,300 euros for the mid-trim. The entry trim will be sold from 19,990 euros. Why is this important? Well, this is important because at this price, this product is profitable for our company. At this price, this product is going to represent an affordable offering to our middle-class customers, which is exactly the most difficult thing that we have to do right now in the Western world, is to make it simple, be these at the price of ICEs for our middle-class customers. This is where we are. We are going to be able to offer for this 23,300 euro EC3 mid-trim, 320 kilometers of WLTP range, which is a very competitive range for this kind of product. And later on, we are going to bring an even more price competitive product at 19,990 euros for 200 kilometers of range. This is demonstrating that we are getting prepared to deliver the most difficult part of our mission. As you know, our mission is to deliver clean, safe and affordable products to protect the freedom of mobility. With this BEV product at a very competitive price with very, very good features, you see that we are now ready for the race. And this is what I wanted to convey to you today. If we step back a little bit and we look at what happened this year, First of all, we have to recognize that we are a growing company. Our strategy is not about shrinking. Our strategy is about growing profitably. You can see that we could grow our net revenues by 6%. And we have a very efficient overall AOI amount of 24.3 billion with a 12.8% margin. Our free cash flow is a record free cash flow, industrial free cash flow of 12.9%. As you remember, last year we were at 10.8. It is up 19%, which once again demonstrates that Stellantis is a very efficient organization to generate cash. And this is something that you have been seeing over the first three years of life of Stellantis, as our cash generation has increased every year compared to the previous one. As a consequence of this, We are today confirming a very outstanding capital return to all of you, the 2023 capital return of 6.6 billion euros, which is a 16% number compared to the January 1st, 2023 market capitalization. This very significant return is something that we believe we owe to you. And you will see that for 2024, we have even better news for all of you. If we look at our therefore commitments, one of them is very strong. It's about growing our BEV sales, our zero emission vehicle sales and our LEV sales. On this front, at the moment where we are making profit with those sales, We can show to you that the BV cells are up 21%. DLEV cells are up 27%. We are number three in Europe. We are number two in DLEV cells in the U.S. And by the way, we are number one in PHEV cells in the U.S. If we continue, we can comment that we are... the undisputed leader of light commercial vehicles in Europe and Latin America, with respectively 30.4% share and 28.6% share. But more than that, we are also the leaders of electrified mobility in LCVs, with in Europe no less than 38.8% share. So we are clearly the leaders of clean mobility for the light commercial vehicles. Last but not least, in terms of their forward commitments, we are ahead of plan. in what relates to the third engine, what we call the overseas club. We want to bring a third engine to our North American engine and our European engine. And it is fair to say that the third engine could grow at twice the pace of the whole company in terms of net revenue, plus 13% compared to plus 6%. And you'll see later on that the profitability is stellar and that right now the third engine is getting very, very close to the profits that we have in Europe, which is excellent news. And that just means that our strategy to go a third engine is not only being executed, but ahead of plan. For the third part of this slide, we want also to confirm to you that we are increasing our BOV offensive. We already have 30 models on sale in 2023, and we are going to move from 30 to 48. On those 18 additional models, eight will be dedicated for the US market, which just confirms what we told you last year. telling you that in 2024, we will be very strong on ramping up this BV offensive. We keep our commitment, the commitment that has been made to you in March 2022, when we presented to you the therefore nine-year strategic plan. We are totally aligned with our commitment, double the net revenue by 2030 and keeping our AOI margin above double-digit. Last but not least, coming back to capital return, what we are going to propose to you is a 3 billion euro share buyback for next year, which means doubling the share buyback of 23 and a dividend that is also going to increase by 16%. So a very significant increase of capital return to our shareholders, which is absolutely normal given this is your company at the end of the day. Moving from here, let's have a look at the regions and starting with North America. North America has delivered a very robust 15.4% AOI margin. Despite everything you know about the events in September and October 2023, we are able to protect 15.4%, which is great. 100 basis points less than last year, which I believe is a very robust result given what has happened. And I want to take this opportunity to convey to our North American teams my warm thanks and the very sincere appreciation for everything that has been done. Of course, we did not do everything well as we have lost some market share. We believe that we have understood what did not went well in terms of operations and we believe that we are now on track to fix that. And all the things we did not do well in 23 are opportunities to do much better in 24. And we believe that we have the tools for that. From here, we also have to recognize that we have been protecting the value of what we are doing in our company, which is translated by the fact that we have the best U.S. average transaction price of the industry, at least compared with our direct competitors. We are number one PHEV sales. Actually, it's more than being number one. We just doubled. are year-over-year sales to 136,000 units in 2023. And we are number two in LEV sales. What this tells us is that for the transient period that we may have ahead, we are perfectly positioned to perform with our plug-in hybrid technology, the 4xE technology that has proven to be a great success and still is in the U.S. market. Last but not least, the commercial fleet sales. We are up 20%. We are bringing more ProMasters. We are bringing ProMaster EV to the market, which is a great offering to many of our corporate fleet customers. And this is now live. We are able to ramp up. We are ready for this competition and we are gaining significant volume in 2023. We expect to gain more volume in 2024. And last but not least, in terms of pickup trucks, which is, as you know, a big profit provider for our operation in North America, we have presented to you and to the world the large spectrum of our technologies. We are going to bring ICE. We are going to bring pure BEV with a fantastic range of 500 miles. We are going to bring range extenders for different kinds of vehicles. customer segments across the market. We believe we have the largest, the most efficient market coverage in pickup trucks in the US. So great results, robust results in North America and opportunities to do even better, mostly in US and Canada. If we move from here and have a look at Europe, The first great thing about Europe is that Europe was able to sustain a stable 9.8% AOI margin and grew the profit to 6.5 billion. This is good because the competition was much more sharp than it was in the previous years and because we had a significant increase on our LEV cells and BEV cells. So the mix of electrified cells increased significantly. And at the same time, we could maintain the AY margin. And at the same time, we could grow the amount of profits. So a great performance there, even though a little bit like in the US, we suffered on the share. We lost 140 basis points. We believe that this is coming back quite strongly and we'll have the opportunity to discuss because we see that our order book is now being filled in a very efficient manner. One thing that we see in Europe, which is quite stunning... And quite demonstrative of the power of our products, the power of the appeal of our products and the power of our technology is that as soon as we communicate a little bit more on marketing communications, we have a very good response from the market. And that's what we have been doing over the last few weeks. And we see that the response from the market is very strong. And we see our order book getting filled week after week. So we believe that we can do a better job in Europe in 2024. From here, we have to recognize that our 14.2% BEV market share is below the total market share. Of course, this has also to do with the fact that we want to protect the profitability while we grow the sales, as we have seen. So there was a significant growth on sales. At the same time, we are protecting the per unit margins to make sure that we protect our earnings vis-à-vis the BEV sales mix as we are reducing the cost every single day, as we will see later on. So number three in Europe in BEV sales with a significant growth. a number that was increased by 38 kilounits year over year. Online sales is a big success, a very big success. This new sales channel is something that we believe is very promising for the future. It is a much lower cost of distribution. It is meeting the expectations of the customers who have the need for a hassle-free customer journey. And we are offering exactly that, a hassle-free customer journey with all the services online. The result is here, up 55%, a very strong number. Overall in the world, we are at 360,000 sales for the whole world. We are at 188,000 sales in Europe, and specifically in Europe, a very good response to the very nice customer journey, hassle-free, that we are offering on this specific channel. In terms of LCV, our leadership is undisputed, 30.4% market share, with, as I already mentioned, a 38.8% market share for the BEV Pro1 vans in Europe, which is a very strong position. As you know, the LCVs represent one-third of the total net revenues of the company. Last but not least, we are executing on our plans to bring gigafactories to our markets and be able to source battery cells from the regions to the regions. It is quite clear that we have with ACC not only taken the leadership, in terms of shareholding, but also that we are executing on plan. And this is very important. We are on track, on plan for the first plant in Douvrain in France that is now manufacturing the primary production on schedule. And by the end of this year, we'll start delivering to our vehicle plants the final battery cells that we need for our European sourcing. It is a very big achievement and I would like to congratulate the ACC top executive team and namely its CEO, Yann Vincent. From here, let's move to the other regions. And here you have really a very nice picture about what our leaders are doing. Middle East and Africa is quite outstanding. We could double The overall amount of profit, the AOI amount has doubled to reach 2.5 billion. The AOI margin of Middle Eastern Africa is by far the most profitable business that we have across the regions at 23.7%. The number two being North America at 15.4%. And then you have South America at an AOI margin of 14.8. It's the number three with an AOI that was up 16 percent. So a leading region, both in automotive group sales, in brand sales with Fiat and here also 2.4 billion of additional of profit. And last but not least, China and India, Asia-Pacific. with a very respectable margin of 14.2%, stable in net revenues. And we have, of course, still some good things to do in terms of planning, to leverage the leap motor strategic partnership, which is a big opportunity, as we are controlling all the exports outside of China and consolidating the profits that will come from the exports outside of China for the leap motor sales. We are also in a position to see that the C3 sales in the Asia-Pacific are growing by 30%. which means that our smart car platform strategy is now bringing some results in terms of growth for our company. This is what we can say here, but the most important thing is that Middle Eastern Africa, South America, India, Asia Pacific represent the third engine of our company. And we see that in 2023, this third engine was very close to the profit that we get out of Europe. So I expect that very soon we will have this third engine active. which means three big engines of profitability for our company, with Europe and third engine at a similar amount at the end of the day, which gives our company even more robustness and even more capability to be an all-weather company, given the risk that we could face of regional crisis. If we move from here, I would like to comment also our very creative businesses that are expanding across the world. I will start with financial services. First to say that our U.S. financial services are now live. They are very active. They are growing. We are at $7 billion of receivables. We expect that this is going to exceed the 10 billion target of 2024. And this already represents a tripling of what we did in 2022. So very fast growth, very efficient growth. And this is going to give us a very important tool on the comeback on the share that we expect in North America and the US. It's an important tool for sales and marketing, as you know. Now we have it. Now it's growing. And now it's competitive to support our sales and marketing teams. We have also completely concluded the restructuring of our European financial services. They are now much more simple. one financial service per country. We have been improving our receivables and now we are at 56 billion euros of receivables. It is 21% more than last year. So growing and now totally live and totally efficient. And we have also reinforced our presence in Brazil. On the circular economy business, this is really a fantastic opportunity for us. As you know, we have created the first circular economy hub in Italy. We will soon announce another one. And we are so excited about this for a very simple reason. It's a growing business. We grew by 18%, and it's extremely accretive to our overall AOI margin of the company. Very accretive, pulling us up, and we see that there is a lot of growth that we have ahead of us. I would mention the remanufacturing with a 14% sales increase with 38 product lines that we remanufacture. The reuse, where we increased by 63% our sales in 160 countries. We have now set up in the repair 24 battery repair centers across mostly Europe. And the recycle, where we increased by 84% the number of parts that we are recovering for recycling. This is a highly creative business. This is growing, and this is going to be growing even more when we will announce additional circular economy hub on top of the one we already have in Mirafiori in Italy. So on this page, great businesses that are growing represent big opportunity for the future. Let me move from here and talk a little bit about product. Product is our passion. Technology is the way to express appeal. It is quite clear on this slide that not only you have this fantastic example of the Alfa Romeo Stradale 33, which has been a fantastic project that comes with a great brand equity to add to the great brand equity of Alfa Romeo, but more than that, it supports the fact that our sales... across the world in Alfa Romeo could grow by 33%. 33% of global sales growth for Alfa Romeo. Great job done by the team. And it has been, of course, put in a high level of visibility by the Stradale 33 project, which is completely sold even before we deliver the first car. So a great brand equity reinforcement. On the pickup trucks, we have everything we need. We have all the technologies. We are now going to start ramping up with the pure BEVs, with the range extenders, with the ICEs, with the model year 25 RAM 1500. We see that there is a very significant potential there for our comeback on profit and share. And we see that we are going to be able to offer up to 500 miles of range on the pure BEV and also more than 700 miles of range for the range extender. So 500 miles of range for the BEV, 700 miles of range for the range extender. This is outstanding from a technology mastering perspective. This means that we are going to completely wash out any range anxiety syndrome. This is going to disappear, and that should bring a solution to all the pickup truck customers, not only on the coastal areas, most probably with BEV, but also in the deep countryside areas, possibly with more range extenders. If you look at the lower part of this slide, you have the first application of our Stellar Medium platform. with the Peugeot E3008, 700 kilometers of WLTP range. This is a product that is going to use the battery cells from ACC. So it's going to be fully supported by our local sourcing of battery cells in the European market, a huge pillar for the business of Peugeot, now ramping up in our social plant. A very strong product, as you may imagine. In terms of Opel brand, the remarkable performance of Opel is not only the fact that the BEV cells could grow by 27%, but because Opel is the first brand of the 14-brand portfolio of Stellantis that has a total market share on BEV that is on par with the total market share all in of the brand. So this is the first brand of our brand portfolio that has been able to deliver in the BEV market the same market share as the total market share in the market. It is important to see that the pure BEV sales could grow by 27%. whereas the total sales could grow by 15%, which is an excellent result. Knowing where we are coming from back in 2017, it is good to see that Opel is in great shape, great growth, great profit, great technology. From here, I would like to hand over to Nathalie. She is going to give you all the details on our financial results. Nathalie, the floor is yours.