Stellantis got off to a flying start in its first year following the merger of Fiat Chrysler and Peugeot manufacturer PSA, with the world’s No.4 automaker reporting profitability and advantages from the combination both ahead of schedule.

The business said on Wednesday that its adjusted operating profit margin was 11.8 percent in 2021, above its aim of roughly 10%, owing to good progress on synergies, which delivered around 3.2 billion euros ($3.6 billion) in net cash benefits.

The carmaker’s Milan-listed shares were up 5.7 per cent following the report.

“Record results prove that Stellantis is well positioned to deliver strong performance, even in the most uncertain market environments,” Chief Executive Carlos Tavares said in a statement.

Tavares will deliver the group’s complete business strategy next week.

Stellantis predicted a double-digit margin this year as well. In 2020, the pro-forma figure was 6.9 per cent.

Last year, North American margins reached a new high of 16.3 per cent.

According to Banca Intesa analyst Monica Bosio, 2021 results “materially” surpassed forecasts, while 2022 guidance is based on a cautious market view.

“While the current environment remains difficult and a further material jump in 2022 fundamentals looks more challenging given the starting base, we believe the group could continue to leverage on its strong synergies’ execution,” she said in a note.

According to Chief Financial Officer Richard Palmer, cash synergies booked last year placed the firm ahead of track in meeting 80 percent of its 5 billion euro cost reduction runrate objective by 2024.

He predicted that raw material inflation will continue to be a concern for the sector this year, and that the semiconductor scarcity, which would cost the firm around 20% of its projected output in 2021, had peaked in the third quarter of last year.

Stellantis, he continued, did not have a major direct exposure to Russia, which is under international economic sanctions as a result of its activities in Ukraine.

“We have flexibility in production,” Palmer said. “We are confident we can manage the Russia crisis.”

The company, which earned more than 6 billion euros in industrial free cash flow last year, recommended paying out 3.3 billion euros in regular dividends, or 1.05 euros per share.

This year’s free cash flow is forecast to be positive, according to the company.

Tavares has developed a 30 billion euro electrification plan and created agreements with Amazon and iPhone manufacturer Foxconn to hasten the development of software and chips for future linked cars.

He has also developed plans for five battery factories and reached agreements with unions to continue simplifying European operations, avoiding possible labour issues and increasing the company’s operational profit margin.

Palmer stated that the company has no intentions to form distinct businesses for electric and combustion engine vehicles, as rivals Renault and Ford are considering.

“We just created a new company and that should be enough to start with as long as we manage complexity and diversity,” he said.

(Adapted from AutoNews.com)