By Giulio Piovaccari

MILAN (Reuters) - Stellantis gave a cautious outlook for 2025 on Wednesday as the automaker scrambles to recover from a slump in its U.S. business last year that led to the ousting of CEO Carlos Tavares.

The group guided for a return to revenue growth and positive cash generation this year and for steady margins. But it warned the improvement would not really materialise before the second part of the year, sending its shares down.

The Franco-Italian-U.S. automaker said it expected to see higher net revenues and a higher adjusted operating profit in the second half than in the first half.

It expected to generate cash only in the second half, it added.

This "suggests at best only FCF (free cash flow) breakeven or potentially further cash burn in the first half, when the market was expecting production to crank up again," Bernstein analysts said in a note.

They added that Stellantis' forecasts could yet prove optimistic as they are based on the assumption of no changes to current tariffs and global trade.

The Milan-listed shares were down 4.2% at 12.93 euros by 1135 GMT, the worst performers among Italy's blue-chips. They peaked around 27 euros in early 2024.

Stellantis guided towards a "mid-single digit" margin on its adjusted operating profit for 2025.

That is broadly in line with a 5.5% margin in 2024, down from 12.8% in 2023 and at the bottom of the forecast range it provided in September after a shock profit warning, which later led to the exit of Tavares.

Automakers in Europe, where Stellantis is the second largest group, are battling high costs, sluggish demand and stiff competition from China, as well as complying with stringent carbon regulations and facing the threat of new tariffs.

Last week rival Renault reported a record operating profit for 2024, slightly beating expectations, while Germany's Mercedes braced for a sharp drop in 2025 earnings.

Europe's no.1 carmaker Volkswagen will report 2024 results in March.

Stellantis burnt through more than 6 billion euros ($6.3 billion) in cash last year, while total revenues fell 17%, due to "temporary gaps" in the product range and "now-complete inventory reduction initiatives", it said on Wednesday.

The group, which is now led by Chairman John Elkann, said the process to appoint the new CEO was well underway and reiterated it would be concluded within the first half.

One of the most profitable volume automakers for years under Tavares, Stellantis was hit in 2024 by slumping sales and bloated inventories, especially in the U.S., its most profitable market, as it raised prices too high, losing longstanding customers.

It proposed a dividend on its 2024 results of 0.68 euro per share after paying 1.55 euros last year.

($1 = 0.9530 euros)

(Reporting by Giulio Piovaccari in Milan and Gilles Guillaume in Paris, additional reporting by Alessandro Parodi in Gdansk, editing by Alvise Armellini, Jane Merriman and Elaine Hardcastle)