Mercedes-Benz: profits slump, but margins beat expectations. Estimates confirmed

The Mercedes-Benz Group posted a 70 per cent drop in operating profit to EUR 750 million and net profit down 30.8 per cent to EUR 1.19 billion. The slowdown in demand in China, US tariffs and EUR 1.35 billion in extraordinary restructuring charges were the main factors. This was the ninth consecutive quarter of declining profits for the German group after three years of strong growth. Revenues fell 6.9 per cent to EUR 32.15 billion.

Nevertheless, profitability in the automotive sector was better than expected: the operating margin came in at 4.8%, slightly higher than the 4.7% a year ago and well above the 3.9% predicted by the consensus. The improvement reflects the 10% growth in sales of top-of-the-range models, such as Maybach and AMG, which partly offset the general downturn and the effects of extraordinary costs. It was precisely the resilience of profitability and the confirmation of the annual guidance (4-6% margin), together with the resumption of the EUR 2 billion buyback, that pushed the share price to a seven-month high in Frankfurt (+6% at the start of the session). The share buyback programme had been announced at the beginning of the year, but temporarily suspended pending greater visibility on the markets and cash flows.

In the quarter, global car deliveries fell by 12%, with -27% in China (worst result since 2016) and -17% in the U.S. In contrast, sales of electric vehicles grew by 9%, supporting the transition process, albeit with more compressed margins.

In the first nine months of 2025, net profit more than halved, from 7.8 billion to 3.8 billion, with an average operating profitability of 5.5 per cent. The company confirms its target of 5 billion in savings by 2027, through cost cuts and range rationalisation.

"The competition in China is extreme and will not go away anytime soon: it is a multi-year challenge,' commented CEO Ola Källenius, while CFO Harald Wilhelm expects fourth quarter 'sales to be in line with the third quarter'. On the Nexperia affair, the Dutch semiconductor manufacturer controlled by the Chinese Wingtech, which is at the centre of tensions between Washington and Beijing, Källenius explained: 'We are looking for alternatives around the world, but we cannot predict how it will develop: the solution lies in the political arena.