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Mercedes-Benz with a slump in profits and a decline in sales
Mercedes shares are falling sharply: Find out why Mercedes-Benz experienced a weaker start to the year and what the future of the car manufacturer is shaping up to be. Discover all the details here!
Mercedes-Benz with a slump in profits and a decline in sales
Mercedes-Benz, the renowned car manufacturer, had a significantly weaker start to the year than expected due to problems in supply chains and model changes. The decline in sales of top models such as the S-Class in particular had a negative impact on profits in the first quarter. Despite these challenges, the management around CEO Ola Källenius remained confident and stuck to the annual forecasts.
The Mercedes-Benz share recorded a noticeable decline, falling by 5.15 percent to 70.94 euros at the close of trading via XETRA. Analysts such as Tom Narayan of Canadian bank RBC expressed concerns about the passenger car division's profitability, which was below expectations. Nevertheless, the statements on the outlook were classified as reassuring, according to UBS expert Patrick Hummel.
The company recorded a 4.4 percent decline in sales in the first quarter to 35.9 billion euros, while earnings before interest and taxes fell by almost 30 percent to 3.86 billion euros. In particular, the operating profit margin before interest and taxes in the passenger car sector fell surprisingly significantly by 5.8 percentage points to 9.0 percent. Chief Financial Officer Harald Wilhelm described the quarter as challenging, but expressed optimism for improvement as the year progressed.
The decline in sales and model changes for the top models meant that Mercedes-Benz sold 8 percent fewer cars in the first quarter than in the previous year. Although price enforcement remained high, sales declined due to model renewals. Supply bottlenecks for 48-volt batteries also had a negative impact. The van division was able to partially compensate for the weakness in passenger cars, but weaker development is forecast for this division over the course of the year.
Overall, Mercedes-Benz's consolidated profit fell by around a quarter to 3.03 billion euros. Despite these challenges, the company confirmed the annual forecasts and expects the current situation to improve as the year progresses. However, factors such as supply constraints and China's real estate sector could continue to impact Mercedes-Benz's performance.