Shares of Stellantis were up Wednesday as the European car giant's third-quarter results showed it was making progress with its 60 billion euro turnaround plan.
Third-quarter revenues rose 1% to 37.6 billion euros from a year ago, the Chrysler and Jeep owner said on Wednesday, while adjusted operating income rose 184% to 256 million euros from 90 million euros a year earlier.
The automaker's industrial free cash flow improved to negative 4 billion euros, up from negative 4.3 billion the year prior.
Stellantis on Wednesday also reconfirmed its 2026 guidance and target to achieve positive free cash flow next year, which is a main focus for investors.
"Q3 was soft, but consensus expectations were far lower. Key here is that '26 Guidance was maintained while other auto OEMs and suppliers are cutting on elevated costs," RBC Capital Markets analyst Tom Narayan said Wednesday in an investor note.
Stellantis stock rose roughly 9% Wednesday in Milan and was up by 12% in early trading in New York, but it remains sharply down since the beginning of the year.
Stellantis CEO Antonio Filosa told investors Wednesday that the company is ahead of schedule on its turnaround plan, which was announced in May. He said Stellantis expects to exceed its previously announced cost-cutting efforts of 6 billion euros under the plan by 2028, including 2.4 billion euros to start 2027.
"We are very confident in reaffirming our '26 guidance. Those include '27 free cash flow positive," Filosa said Wednesday in response to concerns about the carmaker's ability to achieve its free cash flow target.
Stellantis' 2026 guidance includes a mid-single-digit percentage increase in net revenue and a low-single-digit adjusted operating margin.
Stellantis' turnaround plan includes investing 36 billion euros in its portfolio of automotive brands, with 60% of the cash to go towards its struggling North America sector. It also plans to introduce new vehicles, refresh models, and incorporate new technologies in its products.
Stellantis is targeting roughly 23% revenue growth, from 154 billion euros last year to 190 billion euros by 2030, with a 7% adjusted operating margin by then.
China competition
European carmakers, including Stellantis, have been struggling in China as domestic brands like Xiaomi, BYD and Geely gain ground and intensify competition.
Just this week, German luxury carmaker Porsche said it would reduce its exposure to China as car sales decline in the region. Meanwhile, Mercedes-Benz said its third-quarter car sales slumped due to a "challenging market environment," in the country.
Earlier this month, Filosa told CNBC that European regulators need to do more to incentivize carmakers to manufacture vehicles in the region to fend off Chinese rivals.
Filosa called for regulation that "incentivizes, rewards, and protects the ones that are able to demonstrate that they design cars, engineer cars."