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MILAN (Reuters) -The head of Stellantis said the automaker would have to accelerate cost cutting to keep profitability strong in a more challenging pricing environment after its revenues and operating profit rose to beat estimates in the first half.
The world’s third largest automaker by sales said its January-June adjusted earnings before interest and tax (EBIT) rose 11% to 14.1 billion euros ($15.6 billion), topping the 12.1 billion expected by analysts in a Reuters poll.
Milan-listed shares in Stellantis were up 1.6% by 0725 GMT, outpacing a 0.15% rise in Italy’s blue-chip index.
Its margin on adjusted EBIT slipped to 14.4% from 14.5% a year earlier, when pricing power had been supported by a significant inflationary environment, Chief Executive Carlos Tavares said in a media briefing.
He argued that the Stellantis margin performance was still better than those of Tesla (NASDAQ:TSLA) and GM, which he said posted margins of 10.5% and 8.3% respectively.
“If the market is more competitive in terms of pricing, we need to work harder on cost reduction to make sure that we give back to the market the breathing space it needs while protecting our per unit margins,” he said.
Stellantis produces cars with brands such as Fiat, Peugeot (OTC:PUGOY), Alfa Romeo, Ram, and Jeep.
Its first-half EBIT margin fell 60 basis points to 17.5% in North America, the group’s most profitable region.
New CFO Natalie Knight, who took the job this month, said the group made “a variety” of price increases in 2022 and looked at where additional pricing was appropriate in the first half of this year.
Tesla kicked off a round of price cuts in China in January, putting pressure across the board on automakers and suppliers to contain costs.
The carmaker, which shipped more vehicles in the first half also thanks to fewer logistic issues in Europe, confirmed its target for a double-digit margin for the full year.
($1 = 0.9038 euros)
