First trimester

Mercedes-Benz, profits -34% but no change in estimates. Stable prices

Operating profit falls. Bev orders slow down, but share should remain around 20% of total sales

by Finance Review

Mercedes Benz E300 al the Beijing International Automotive Exhibition o Auto China 2024.

2' min read

2' min read

That 2024 would be a year of transition for the car was widely predicted. The results of the first three months are putting this in black and white. Adjusted operating profit of Mercedes-Benz Group fell conspicuously to 3.6 billion versus 5.4 billion in 2023 (-33.6%) in the first quarter, a consequence of model rotation in Asia and weak demand for electric vehicles. Earnings per share fell 22.5% to 2.86 versus 3.69 a year ago.

The company left its forecast for the year unchanged, but stated that its automotive margin was 9%, below its annual target and especially well below the result of a year ago (14.8%).

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The German luxury car manufacturer struggled with its strategy to strengthen profits by selling more high-end cars. In the first three months of the year, sales weakened for some of its best-selling models as consumers awaited the release of new or upgraded versions of the vehicles.

In addition, the company of the three-pointed star has seen orders for all-electric models slow down. In February, the company recalibrated its sales targets, predicting that the share of battery-powered vehicles (Bev) and plug-in hybrids will remain largely stable in 2024, between 19% and 21% of total sales.

Mercedes said that its prices remained at a high level in the first quarter despite pressure from price cuts triggered by Tesla. The company added that it wants to 'maintain and defend' prices at current levels.

As for the estimates for the current year, Group revenue is expected to remain at the 2023 level. Ebit and free cash flow in the industrial segment are expected to be slightly below the previous year's level. The adjusted return on sales (RoS) of Mercedes-Benz Cars is expected at 10-12%; the adjusted return on sales of Mercedes-Benz Vans is estimated at 12-14% and the adjusted return on capital of Mercedes-Benz Mobility at 10-12%.

On Tuesday, 30 April, the stock closed at -5.15 per cent.

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