🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Mercedes-Benz shares slip on lower margin forecast

Published 26/07/2024, 07:44 pm
© Reuters.
MBGn
-

Investing.com – Shares of Mercedes Benz Group AG (ETR:MBGn) inched lower on Friday as the company lowered its earnings guidance for the year. 

The company adjusted its full-year car margin guidance to 10-11% from a previous range of 10-12%. While consensus estimates were already closer to the lower end of the range, “we would not be surprised if shares trade lower,” said analysts from RBC Capital Markets in a note. 

The analysts flagged concerns over the potential impact of high dealer inventory levels, particularly in the US, on pricing. This could lead to downward pressure on margins, especially in the second half of 2024 and potentially into 2025.

Despite achieving Group Earnings Before Interest and Taxes (EBIT) of €4.0 billion, a decrease from the prior year's €5.0 billion, the company maintained double-digit profit margins in a challenging market.

The luxury automaker saw an uptick in Mercedes-Benz (OTC:MBGAF) Cars earnings, with EBIT margins recovering to 10.2%. However, this figure fell short of Citi Research's estimates and landed at the lower end of the full-year guidance range. The company attributed the shortfall to weaker volume and mix, as well as other factors. 

On the positive side, Mercedes-Benz Vans delivered a strong performance with a 17.5% return on sales, benefiting from lower material costs. However, the Mobility division underperformed due to higher credit risk costs and negative volume and margin effects, Citi added. 

Key risks identified by Citi include Mercedes failing to comply with global ESG regulations, a sharper cyclical decline in volumes, supply recovery pressure on prices and mix, and margin pressure from selling more BEVs.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.