The carmaker Mercedes Benz is more confident for the year as a whole after another surprisingly good quarter. In 2023, the group now expects group earnings before interest and taxes (EBIT) to be at the same level as the previous year thanks to renewed prospects for the van business, the group announced late Wednesday evening in Stuttgart. So far, Mercedes had expected a slightly falling profit. The free cash flow (FCF) in the core business with cars and vans (industry) should now slightly exceed the level of 2022 (previously: stagnation).
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increased by a minimal 0.1 percent at the start of trading on Thursday. Since February, the price has mainly been in a range of 70 to 75 euros, after having only been just over 50 euros in some cases in autumn 2022.
Both the profitability in the two main divisions and the overall operating results were better than expected on the market, wrote analyst Tom Narayan from the Canadian bank RBC. Jefferies expert Philippe Houchois wrote that market expectations for the inflow of funds had already assumed an improvement.
Mercedes benefits as does its competitor bmw from high sales prices for a long time, but in the second quarter the increase in sales in the passenger car sector was somewhat smaller than the increase in sales. Some experts do not see the Swabians as immune to a downturn in the economic environment, although the weaker buying mood due to the poorly performing economy should initially have a greater impact on mass car manufacturers. CFO Harald Wilhelm (57) said in a conference call with analysts that sales in the coming year should not be below those of this year, partly because of the new models coming onto the market.
Profit rises in double digits after austerity program
The group increased sales in the second quarter by 5 percent to 38.2 billion euros. The van division in particular is currently growing strongly, both in terms of sales and turnover. Earnings before interest and taxes adjusted for special effects increased by a total of 6 percent to 5.21 billion euros. The bottom line is that profits rose by 14 percent to 3.64 billion euros compared to the same period last year. Mercedes boss Ola Källenius (54) has launched savings programs in both divisions to bring down the previously high fixed costs.
The return on sales in the passenger car business was 13.5 percent and also exceeded forecasts, but fell compared to the high level of the previous year. Higher prices and sales volumes were also positive, while currency effects, higher material costs, one-off payments to suppliers and higher investments had a negative impact.
Business in the financial services and mobility division, on the other hand, is no longer as brilliant as it was last year, when the group thrived on the high prices for used cars. Leasing returns could be resold much better than expected. In view of higher interest rates and normalizing prices, however, the environment has cooled down. In addition, the exit from the Russian business with 276 million euros in costs fell in the division, as CFO Harald Wilhelm said in a conference call with analysts.