MILAN (Reuters) -Stellantis sees weaker profitability through the whole first half of the year, with margins at the low end of its forecasts, its CFO said on Tuesday after the automaker reported falling revenues in the first three months of the year.

CFO Natalie Knight told analysts the Franco-Italian automaker was “fully committed” to its guidance for a full-year double digit margin on adjusted operating income and for a positive industrial free cash flow.

However it saw the margin in a range between 10-11% in the first half of this year, “reflecting in large part the softer first half starting point on revenue, adverse regional mix and an expectation of continued forex headwinds”.

Milan-listed shares in the company were down 8% by 1315 GMT, the worst performers among Italy’s blue-chips.

The group’s margin on adjusted operating income stood at 12.8% in the full-year 2023.

Knight said Stellantis also saw opportunities to improve profitability in the second half thanks to a string of planned new models.

Stellantis, whose brands include Peugeot, Fiat, Jeep and Alfa Romeo, has launched four new models since the beginning of 2024, out of a total of 25 planned for the full year, including 18 EVs.

Among new launches Knight cited was the RAM 1500 truck, out now, and during the year Stellantis will release models including low-cost EV Citroen eC3, Peugeot E3008 EV SUV and Jeep’s Wagoneer S in the United States.

The transition to the new product portfolio would weigh on cash generation, she said.

“Expect first half industrial free cash flow to be visibly below last year’s level,” said Knight.

In the January-March period, Stellantis’ net revenue fell 12% to 41.7 billion euros ($44.6 billion) short of analyst expectations of 42.6 billion euros, according to a Reuters poll.

Lower volumes, an unfavourable product mix and foreign exchange dynamics weighed on the result, although they were partially offset by a “firm” pricing power, Stellantis said.

“We are reducing inventories to reinforce our strong relative pricing ahead of our new or mid-cycle product launches this year in key regions,” Knight said.

Stellantis consolidated shipments fell 10% in the quarter to 1.335 million units, although unit sales of fully electric vehicles (EVs) were up 8%.

($1 = 0.9343 euros)

(Reporting by Giulio Piovaccari in Milan and Gilles Guillaume in Paris; writing by Giulio Piovaccari; Editing by Giulia Segreti and Ros Russell)

---