Business

Mercedes-Benz raises outlook after higher second-quarter earnings

  • The luxury carmaker had previously said it expected only slightly higher revenues this year and earnings equal to last year.
  • Still, uncertainty due to the war in Ukraine, high inflation, interest rate rises, and the pandemic, particularly in China, could all weigh on the business, the carmaker warned.

expects a significant rise in revenues and slightly higher earnings in 2022 than last year, raising its outlook as the firm reported on Wednesday an 8% jump in second-quarter adjusted earnings to 4.9 billion euros ($4.97 billion).

The luxury carmaker had previously said it expected only slightly higher revenues this year and earnings equal to last year.

Still, uncertainty due to the war in Ukraine, high inflation,interest rate rises, and the pandemic, particularly in China, could all weigh on the business, the carmaker warned.

However, order books were full and Mercedes-Benz Cars was expected to see a slight increase in sales, it said, with the top-end luxury segment forecast to grow more than 10%.

Passenger car registrations in Europe have seen a 12-month decline as supply-chain troubles and rising prices weigh on sales, but luxury carmakers able to prioritize top-end vehicles have broadly proved more resilient as wealthier customers continued to spend.

The luxury carmaker saw an adjusted return on sales of 14.2% in the Mercedes-Benz Cars division, up from 12.8% in the same quarter last year, while returns in Vans fell slightly to 10.1% from 11.4% last year.

Looking forward, it raised its expected adjusted earnings margin for its Cars division in the second half to 12-14% from 11.5-13% previously.

The first half saw a 15% margin but higher material costs, research and development spending and effects from the used car market could weigh on the second half.

Addressing concerns over how German industry will manage gas consumption in the event of further cuts to supply from Russia, Mercedes-Benz said it could reduce its intake in Germany by 50% if regional pooling took place and had found a way to operate the paint shop in its Sindelfingen plant without gas in an emergency.

Source
cnbc

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