European car giant Stellantis reported a 4 billion euro ($4.5 billion) cash shortfall in the third quarter as it ploughed ahead with its $70 billion turnaround strategy to restore profitability.
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 company also reported that negative industrial free cash flow improved to 4 billion euros, up from 4.3 billion the year prior. Stellantis shares were up 3.6% shortly after the European market opened, but have declined 62% since the beginning of the year.
The announcement came as the transatlantic company continues to implement a 60 billion euro ($66.7 billion) turnaround strategy after years of sales declines, especially in North America. Stellantis reaffirmed that it expects positive industrial free cash flow in 2027
"During the quarter, we continued to make progress in the early execution of our FaSTLAne 2030 plan, launching new products, accelerating partnerships as planned, and delivering meaningful improvements in manufacturing and quality," Stellantis CEO Antonio Filosa said in the report.
In May, Filosa laid out a five-year plan to achieve positive free cash flow by 2027.
This 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.
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."
- CNBC's Michael Wayland contributed to this report.