MILAN, Italy -- Stellantis, created by the merger of Fiat Chrysler Automobiles and PSA Group, aims to lift profit margins this year toward the levels attained by its CEO Carlos Tavares at PSA.
Stellantis said it was targeting an adjusted operating profit margin of 5.5 percent to 7.5 percent this year, assuming no further significant COVID-19 related lockdowns.
That compares with a 5.3 percent aggregated margin last year: 4.3 percent at FCA and 7.1 percent at PSA excluding a controlling stake in parts maker Faurecia, which is set to be spun off from Stellantis shortly.
Stellantis said North American profits for FCA rose 7.7 percent in the fourth quarter. Although the company earned 20 percent less in North America for the full year, profit-sharing checks for about 43,000 UAW-represented workers in the U.S. will be 10 percent higher because the labor contract signed in 2019 increased the formula. Workers will get an average of $8,010, the company said, compared with $9,000 at General Motors and $3,625 at Ford Motor Co.
FCA paid significantly less in profit-sharing under the previous contract than Ford and GM, which use a different formula and have generally posted higher profits in recent years.
“The UAW Stellantis 2020 Profit Sharing announced today is great news for our members given the challenges we experienced last year,” UAW Vice President Cindy Estrada said in a statement. “I would like to thank the 2019 UAW FCA National Negotiating Team for their hard work in improving the Profit-Sharing Plan.”
Globally, the former FCA posted fourth-quarter net income of $1.9 billion, a 1 percent decrease from a year earlier. Revenue fell 4 percent to $34.5 billion. For the full year, FCA’s profit fell 99 percent to $29 million.
Tavares delivered an improvement in margins at PSA by cutting costs, simplifying its model range and delivering synergies on its purchase of Opel/Vauxhall.
"Stellantis gets off to a flying start and is fully focused on achieving the full promised synergies," CEO Carlos Tavares said in a statement on Wednesday, announcing last year's results for FCA and PSA.
Combined adjusted earnings before interest and tax (EBIT) amounted to 7.1 billion euros ($8.6 billion) last year.
A Milan-based trader said that was "well above" expectations.
Stellantis targets over 5 billion euros a year in savings from the merger, without closing any plants. Tavares has also pledged not to cut jobs.
The automaker proposed to distribute a 1 billion euro dividend to its shareholders.
A capital markets day for the group is planned for late 2021 or early 2022.
Stellantis was formed in January. It has 14 brands, including Fiat, Peugeot, Opel, Jeep, Ram and Maserati.
Vince Bond Jr. of Automotive News contributed to this report.