Stellantis N.V

Strong Q2 beat vs last year; guidance reaffirmed (good) - Net revenues: EUR 43.5bn, +13% YoY (up ~EUR 5bn). - Adjusted operating income (AOI): EUR 773m, +EUR 560m YoY; AOI margin 1.8% (+120 bps YoY). - Industrial free cash flow (IFCF): +EUR 1.0bn, +EUR 1.0bn YoY. - Management reaffirmed full-year 2026 guidance and reiterated expectation of positive industrial free cash flow in 2027.

Operational momentum improving quality + efficiency, but margins still face headwinds (mixed) - Production efficiency improved North America +870 bps YoY and Europe +170 bps YoY. - Service quality improved 3 months: NA +38% and Europe +24% (quality turnaround is a key theme for future warranty/campaign cost relief). - North America: shipments +38% (build-ahead before shutdowns + new product cadence) and AOI margin 1.6%, but investors noted limited operating leverage—company attributes this mainly to cost + quality gaps rather than unusual one-offs.

VCP cost program is the main lever for 2027–2028 profitability (opportunity) - VCP (Value Creation Program) is already driving industrial cost improvements (Q2 industrial costs improved >EUR 1.9bn). - VCP targets stated: EUR 6bn annual run-rate cost reductions by 2028. - Company says it is on track to implement ~40% of mapped initiatives by end of 2026, implying ~EUR 2.4bn AOI benefits in 2027. - VCP benefit split commentary: for 2027 the EUR 2.4bn is expected to flow essentially fully to AOI (not “reinvested away”). - Example drivers of savings: purchasing/material cost, manufacturing/transformation efficiency, and logistics/distribution optimization; plus warranty/campaign cost reduction tied to quality.