Mercedes-Benz Reports Third Quarter Results

Mercedes-Benz, the German luxury-car maker, released its third quarter results on Thursday. Here are the key details:

Net Profit

The company’s net profit for the quarter was 3.72 billion euros ($3.93 billion), a decrease of 7% compared to the same period last year.

Earnings Before Interest and Taxes (EBIT)

Mercedes-Benz’s quarterly EBIT reached EUR4.84 billion, surpassing the forecast of EUR4.53 billion provided by FactSet. Analysts credited this beat to a strong quarter for the company’s vans business.

Revenue

Sales dipped by 1.4% to EUR37.20 billion. FactSet analysts had projected revenue of EUR37.34 billion.

What to Watch

Headwinds

Mercedes-Benz faced challenges including high supplier costs, inflation, exchange-rate losses, and dampening demand in the industry. Chief Financial Officer Harald Wilhelm acknowledged these factors in a post-earnings call and expects high prices and inflation to persist in the next quarter.

Outlook

While Mercedes-Benz maintained its full-year outlook, it now predicts that its adjusted operating margin will land in the lower half of the targeted 12%-14% range.

EV Problems

Intense competition, particularly from Chinese-made battery-electric vehicles, has posed pricing difficulties for Mercedes-Benz. However, Wilhelm insisted that the company will prioritize margin over volume. Additionally, a shortage of 48-volt electric systems has caused production delays for some electric models.

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