Mercedes-Benz lifts revenue forecast as luxurious vehicles increase

By Victoria Waldersee

BERLIN (Reuters) -Mercedes-Benz raised its full-year revenue forecast on Wednesday as robust demand for luxurious vehicles and value financial savings offset the provision chain bottlenecks which have hampered business output this 12 months.

The German automaker mentioned it now anticipated group earnings to rise not less than 15% this 12 months, in contrast with a earlier forecast of 5%-15% progress, after income at its vehicles division virtually tripled within the third quarter from pre-pandemic ranges.

Pent-up demand in Europe and a excessive order backlog would carry the corporate into subsequent 12 months, chief monetary officer Harald Wilhelm mentioned, including it could prioritise bringing down stock within the fourth quarter. The corporate forecast a slight improve in fourth-quarter gross sales from a 12 months earlier.

The marked improve in profitability comes after Mercedes-Benz pledged in 2020 – then a part of Daimler Group – to chop mounted prices, capital expenditure and analysis and growth spending by greater than 20% by 2025.

Inflation in its personal prices means it might must make extra cuts than deliberate to succeed in that concentrate on, chief monetary officer Harald Wilhelm instructed a media name.

Requested how the carmaker would help suppliers that are fighting rising prices, Wilhelm mentioned negotiations have been happening on a case-by-case foundation however that this was “not an invite to ship us their payments”.

“Everybody must do their homework and adapt to rising uncertainty and the transformation [to electrification],” Wilhelm mentioned. “Whoever began too late with that now has an issue.”

The corporate has no intention to decrease listing costs or step up discounting within the face of rising monetary stress on shoppers, he added, sticking to its technique of prioritising the luxurious standing of its autos over quantity gross sales.

The vehicles division earned 4.03 billion euros from 28.2 billion income within the third quarter, in contrast with 1.4 billion euros and 23.5 billion respectively in the identical quarter of 2019.

The corporate raised its full-year margin forecast for the vehicles division to 13-15% from 12-14%.

WITHDRAWAL FROM RUSSIA

Wilhelm additionally mentioned on an analysts’ name the group would withdraw from the Russian market and dump shares in its Russian subsidiaries – consisting of its business and monetary providers companies – to native buyers.

The corporate had suspended exports of passenger vehicles and vans to Russia in addition to native manufacturing in March following Russia’s invasion of Ukraine.

Mercedes-Benz has a automobile plant within the city of Esipovo, 40 kilometres (25 miles) northwest of Moscow, with over 1,000 workers that produces E-class sedans and SUVs.

“(The withdrawal) shouldn’t be anticipated to present rise to any additional important results on the group’s profitability and monetary place past these reported in earlier quarters,” Wilhelm mentioned.

Group earnings reached 5.2 billion euros from July to September, up 83% from final 12 months, with income up by a fifth to 37.7 billion euros, adjusted returns of 14.5% for the vehicles division and 12.7% at Mercedes-Benz Vans.

Mercedes-Benz Vans noticed gross sales up by slightly below a fifth to 104,000 autos, with electrical van gross sales up by a 3rd this 12 months up to now.

Prime-end luxurious gross sales lifted revenues, making up 15% of total vehicles gross sales within the third quarter.

($1 = 1.0047 euros)

(Reporting by Victoria Waldersee, Modifying by Shri Navaratnam and Mark Potter)

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