According to preliminary figures, the Stuttgart company exceeded the strong value from the same period last year with its earnings before interest and taxes in the first quarter. The run with expensive luxury models brought the company further high profitability in its core business with cars – even if the margin was not quite as brilliant as a year earlier in view of higher material costs and increased expenditure on research and development. There was also a tailwind from the delivery van business, and the business as a whole unexpectedly poured a lot of money into the coffers of the DAX group. The stock rose after trading began on Friday.
In general, the Swabians’ key data from the previous evening were better than expected on the capital market. For a long time, the German car manufacturers had been able to demand high sales prices due to the scarce supply due to the lack of parts and thanks to strong demand – according to industry experts, however, the tide could turn this year. Due to high inflation and rising interest rates in the economic downturn, consumers and companies could check more closely which purchases are necessary.
Mercedes was able to largely allay the concerns of investors – at least in the first three months of the year. In the most important division with car manufacturing, the group achieved a profit margin before interest and taxes of 14.8 percent, adjusted for special effects, as the Stuttgart-based company said. That was less than in the exceptionally strong prior-year period of 16.4 percent, but also more than in the final quarter of 2022. According to the company, analysts on the stock market had only expected a 13.4 percent margin this time.
The price development is likely to have been the most important driver of the results in both the car and van divisions, wrote Deutsche Bank analyst Tim Rokossa. Market expectations for cash inflow have beaten Mercedes by far. He still expects a weaker price environment in the second half of the year, but his estimates for the premium sector now appear rather cautious, according to Rokossa.
In the announcement, Mercedes spoke of healthy net pricing in the car business, higher sales and a good product mix. However, material costs have also risen and higher research and development expenses have been incurred. The carmaker sold 503,500 cars in the first quarter, around 3 percent more cars, with the particularly high-yield and expensive models showing an above-average increase. The company continued to record high growth rates for electric cars.
In the van business, the margin increased significantly compared to the previous year and also exceeded market expectations. Before interest and taxes, the group earned 5.5 billion euros in the months of January to March, around 5 percent more. The cash inflow, which is important for investors – calculated without financial services – was also above the estimates of experts at 2.2 billion euros.
The so-called free cash flow provides information about the current financial strength of a company and can be an indication of how much dividends it can pay out to investors.
Numbers from Mercedes-Benz make you forget the weakness of the previous day
With the figures for the first quarter, Mercedes-Benz has revised the bad mood of the previous day.
On Friday, Mercedes shares temporarily rose by 0.18 percent to 68.35 euros. At the high for the year in March, the paper was already listed at over 75 euros.
According to preliminary figures from Thursday evening, the Stuttgart company exceeded the strong value from the same period last year with its earnings before interest and taxes. In general, the key data were better than expected on the capital market. JPMorgan analyst Jose Asumendi praised the pricing and continued very strong profitability. The car manufacturer’s key data allowed positive conclusions to be drawn about the entire industry.
A trader said the numbers are strong, especially after earlier fears they might be weak. However, a lack of information on the second quarter or the entire financial year could mean that a positive price reaction would not be quite as strong.
The day before, Mercedes-Benz shares had lost around three and a half percent because the entire auto sector had come under pressure after a disappointing quarter for US electric vehicle manufacturer Tesla. Stocks could retake the 21-day short-term moving average on Friday.
STUTTGART / FRANKFURT (dpa-AFX)
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