Market Data 
By Giulio Piovaccari and Gilles Guillaume
MILAN/SOCHAUX, France (Reuters) -Stellantis CEO Carlos Tavares pledged on Thursday to keep its dividend and share buyback programme in place this year, but did not rule out cuts in 2025, as investors worry that the carmaker’s financial woes will hamper future payouts.
Stellantis (NYSE:)’ shares slid 4% on Thursday to their lowest level since July 2022 after a profit warning this week sparked concerns over its dividend payouts and buybacks.
“Our commitments were made for 2024 and they will be kept. The time for 2025 has not come, we will see what will happen at the end of 2024 for a discussion and a decision for 2025,” Tavares said on the dividend policy during a visit to a factory in southern France.
Shares in the owner of the Chrysler, Jeep, Fiat, Citroen and Peugeot (OTC:) brands have fallen more than 43% this year, making them the worst performers among European automotive stocks.
Kevin Thozet, a member of the investment committee at Carmignac, said European automakers were “falling like autumn leaves”, with Stellantis’ profit warning meaning a zero operating margin in the second half of this year.
“This is a real blow to the investment thesis, as it could put the generous dividend at risk and will very likely imply saying ‘bye bye’ to buybacks,” Thozet said.
Asked about possible changes to its dividend and buyback policies, Stellantis on Thursday pointed to remarks by its Investor Relations head Ed Ditmire in an analyst call earlier this week.
“It’s too early in the year for the questions on capital return,” Ditmire said on the call, adding the group’s dividend policy was “clear” with a 25% to 30% payout on net income and a willingness to move it to the high end of that range.
Barclays downgraded the stock to “equal-weight” from “overweight” and cut its 2024-26 EBIT (operating profit) estimates by 33-45%. It said Stellantis’ large free cash flow cut raised questions over its dividend and buy-back potential.
“We got wrong-footed on Stellantis, being too slow to acknowledge its US inventory issue and eroding EU/US market shares,” Barclays analysts said in a note.
They also pointed to how Stellantis’ CFO Natalie Knight broadly confirmed forecasts for a double digit EBIT margin only a week before the group issued its profit warning.
“Frankly, we are still stunned by magnitude of the cut in the shortness of time,” they said.
TOO COMPLACENT
At 1050 GMT, Stellantis, Europe’s No. 5 carmaker by market value, was down 4.1%. The broader auto index fell 1.8%.
Analysts at Bernstein said in a note that under Tavares, Stellantis had been seen as a beacon of constructive management, with great focus on inventory control and pricing.
“Investors could ‘sleep at night’ trusting that the shop was in safe hands,” they said. “But … we were too complacent”.
Investors have been reducing exposure to European autos in recent months on concerns over a difficult transition to electric engines, fierce competition from Chinese newcomers, and increasingly price-conscious consumers.
