Mercedes-Benz Q3 Profitability Impacted by Market Dynamics While Preserving Solid Cash Generation
-- Performance: Solid sales for Mercedes-Benz Cars and Vans. Mercedes-Benz
Cars profitability impacted by subdued macro environment and fierce
competition. Mercedes-Benz Vans continued to deliver good results.
Mercedes-Benz Mobility navigated challenging market conditions.
-- Capital Allocation: Strong cash generation continued. Share buyback cash
outs reach EUR4.3 billion year-to-date.
-- Outlook: Group outlook on EBIT and Free Cash Flow remains in line with
September 19th update.
STUTTGART, Germany--(BUSINESS WIRE)--October 25, 2024--
Mercedes-Benz Group AG generated solid sales in the third quarter despite product transitions, a challenging market environment and fierce competition, particularly in China. Continued Free Cash Flow generation from the industrial business reached EUR2.39 billion for Q3 (Q3 2023: EUR2.35 billion) supported by favourable working capital development. Net liquidity reached EUR28.73 billion (Q3 2023: EUR28.49 billion).
"The Q3 results do not meet our ambitions. Nonetheless Mercedes-Benz continues to generate solid cash flows even in challenging times. We are taking a prudent view about market evolution going forward and we will step up all efforts on further efficiency increases and cost improvements across the business."
Harald Wilhelm, Chief Financial Officer of Mercedes-Benz Group AG
Divisional results
For Mercedes-Benz Cars weaker macroeconomic conditions and fierce competition, mainly in Asia, outweighed improved product availability leading to adjusted earnings before interest and taxes $(EBIT)$ of EUR1.2 billion (Q3 2023: EUR3.4 billion). As previously announced in September, Q3 EBIT was weaker compared with the second quarter due to softer net pricing and a less favourable sales mix, leading to an adjusted Return on Sales (RoS) of 4.7% in the quarter. In addition to tougher market conditions, the Q3 sales mix was also impacted by product transitions, for example the all-new ICE and BEV versions of the G-Class, which will be available in major markets in Q4.
The adjusted Return on Sales (RoS) for Mercedes-Benz Vans was below the previous year with 13.5% (Q3 2023: 15%), driven by lower sales and in line with expectations. A healthy sales mix supported by improved product substance partially compensated lower sales volumes. Furthermore, cost improvements continued.
The adjusted EBIT for Mercedes-Benz Mobility decreased to EUR285 million mainly driven by a lower interest margin (Q3 2023: EUR363 million). The interest margin was impacted by the interest rate development in a competitive environment. As a result, the adjusted return on equity (RoE) reached 8.9% (Q3 2023: 10.4%).
Outlook
At Mercedes-Benz Cars full-year sales are seen slightly below 2023. Sales in Q4 are expected in the vicinity of Q3. Global Top-End Vehicle (TEV) sales in Q4 are seen with positive momentum supported by availability of the G-Class, the Mercedes-AMG E-Class, Mercedes-AMG GT and the SL. The share of BEV and plug-in hybrid vehicles (xEV's) is seen between 18% to 19% in 2024.
The guidance for the adjusted return on sales is seen at 7.5% to 8.5%. Mercedes-Benz Vans adjusted RoS is seen in the range between 14% and 15%.
The adjusted return on equity for Mercedes-Benz Mobility is seen in the range of 8.5% to 9.5% for 2024.
Group revenue is seen slightly below the prior year. As communicated on September 19(th) , Mercedes-Benz Group EBIT and Cash Flow are seen significantly below the prior-year level.
Change Q1-Q3 Q1-Q3 Change
Mercedes-Benz Group Q3 2024 Q3 2023 24/23 2024 2023 24/23
-------------------------- ------- ------- ------ ------- ------- ------
Revenue* 34,528 37,001 -6.7% 107,144 112,414 -4.7%
-------------------------- ------- ------- ------ ------- ------- ------
Earnings before interest
and taxes (EBIT)* 2,517 4,842 -48.0% 10,417 15,334 -32.1%
-------------------------- ------- ------- ------ ------- ------- ------
Net profit/loss* 1,719 3,719 -53.8% 7,806 11,371 -31.4%
-------------------------- ------- ------- ------ ------- ------- ------
Free Cash Flow industrial
business $(FCF)$* 2,394 2,347 +2.0% 6,256 7,874 -20.5%
-------------------------- ------- ------- ------ ------- ------- ------
Earnings per share (EPS)
in EUR 1.81 3.44 -47.5% 7.62 10.47 -27.2%
-------------------------- ------- ------- ------ ------- ------- ------
*in millions of EUR
Mercedes-Benz Change Q1-Q3 Q1-Q3 Change
Cars Q3 2024 Q3 2023 24/23 2024 2023 24/23
------------------ ------- ------- -------- --------- --------- --------
Sales in units 503,573 510,564 -1.4% 1,463,263 1,529,793 -4.3%
------------------ ------- ------- -------- --------- --------- --------
- thereof xEV 87,232 102,292 -14.7% 267,372 289,900 -7.8%
------------------ ------- ------- -------- --------- --------- --------
- thereof BEV 42,544 61,621 -31.0% 135,908 174,471 -22,1%
------------------ ------- ------- -------- --------- --------- --------
Share of xEV in
unit sales in % 17.3 20.0 - 18.3 19.0 -
------------------ ------- ------- -------- --------- --------- --------
Revenue* 25,602 27,131 -5.6% 78,485 83,187 -5.7%
------------------ ------- ------- -------- --------- --------- --------
Earnings before
interest and
taxes (EBIT)* 1,198 3,312 -63.8% 6,410 11,312 -43.3%
------------------ ------- ------- -------- --------- --------- --------
Adjusted earnings
before interest
and taxes
(EBIT)* 1,207 3,357 -64.0% 6,293 11,282 -44.2%
------------------ ------- ------- -------- --------- --------- --------
Adjusted return
on sales (RoS)
in % 4.7 12.4 -7.7%pts 8.0 13.6 -5.6%pts
------------------ ------- ------- -------- --------- --------- --------
Cash flow before
interest and
taxes (CFBIT)* 2,412 2,148 +12.3% 6,865 8,898 -22.8%
------------------ ------- ------- -------- --------- --------- --------
Adjusted cash
conversion rate
$(CCR)$ 2.0 0.7 - 1.1 0.8 -
------------------ ------- ------- -------- --------- --------- --------
*in millions of EUR
Change Q1-Q3 Q1-Q3 Change
Mercedes-Benz Vans Q3 2024 Q3 2023 24/23 2024 2023 24/23
---------------------- ------- ------- -------- ------- ------- --------
Sales in units 91,063 105,083 -13.3% 299,923 323,473 -7.3%
---------------------- ------- ------- -------- ------- ------- --------
- thereof BEV 4,375 6,348 -31.1% 12,564 14,972 -16.1%
---------------------- ------- ------- -------- ------- ------- --------
Share of BEV in unit
sales in % 4.8 6.0 - 4.2 4.6 -
---------------------- ------- ------- -------- ------- ------- --------
Revenue* 4,657 4,939 -5.7% 14,324 14,677 -2.4%
---------------------- ------- ------- -------- ------- ------- --------
Earnings before
interest and taxes
(EBIT)* 618 715 -13.6% 2,381 2,283 +4.3%
---------------------- ------- ------- -------- ------- ------- --------
Adjusted earnings
before interest and
taxes (EBIT) * 628 743 -15.5% 2,262 2,254 +0.4%
---------------------- ------- ------- -------- ------- ------- --------
Adjusted return on
sales (RoS) in % 13.5 15.0 -1.5%pts 15.8 15.4 +0.4%pts
---------------------- ------- ------- -------- ------- ------- --------
Cash flow before
interest and taxes
(CFBIT)* 893 980 -8.9% 2,127 2,167 -1.8%
---------------------- ------- ------- -------- ------- ------- --------
Adjusted cash
conversion rate 1.5 1.4 - 1.0 1.0 -
---------------------- ------- ------- -------- ------- ------- --------
*in millions of EUR
Mercedes-Benz Change Q1-Q3 Q1-Q3 Change
Mobility Q3 2024 Q3 2023 24/23 2024 2023 24/23
-------------------- ------- ------- -------- ------- --------- --------
Revenue* 6,007 6,302 -4.7% 19,209 18,931 +1.5%
-------------------- ------- ------- -------- ------- --------- --------
New business* 14,235 15,183 -6.2% 43,080 45,299 -4.9%
-------------------- ------- ------- -------- ------- --------- --------
Contract volume
(September, 30)* 134,298 133,840 +0.3% 134,298 135,027** -0.5%
-------------------- ------- ------- -------- ------- --------- --------
Earnings before
interest and taxes
(EBIT)* 285 363 -21.5% 835 1,074 -22.3%
-------------------- ------- ------- -------- ------- --------- --------
Adjusted earnings
before interest
and taxes (EBIT)
* 285 363 -21.5% 835 1,350 -38.1%
-------------------- ------- ------- -------- ------- --------- --------
Return on equity
(RoE) in % 8.9 10.4 -1.5%pts 8.6 10.3 -1.7%pts
-------------------- ------- ------- -------- ------- --------- --------
Adjusted return on
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