German automaker Mercedes-Benz saw its shares climb nearly 5% on February 23rd after beating Q4 earnings expectations and announcing a new €3 billion share buyback program.
However, Mercedes cautioned of ongoing supply chain disruptions and an uncertain global economic outlook.
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- Mercedes shares jump 5% as company announces new €3B share buyback program.
- Q4 earnings beat expectations, but Mercedes warns of ongoing supply chain disruptions.
- Despite “exceptional uncertainty” ahead, Mercedes is investing record amounts in new EVs and future innovation.
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Mercedes Soars on Buybacks Despite ‘Exceptional Uncertainty’ Ahead
Mercedes Delivers Strong Q4 Results
Mercedes posted Q4 2022 earnings before interest and taxes (EBIT) of €4.33 billion, slightly above analyst consensus forecasts.
This brought full-year EBIT to €19.66 billion on revenues of €153.2 billion, up 2% from 2021.
The company also unveiled plans for an additional €3 billion share buyback program, under which repurchased shares will be canceled.
This news sent Mercedes stock up 4.7% in Thursday trading.
Mercedes Supply Issues, Global Tensions Cloud 2023 Outlook
Despite the solid Q4 results, Mercedes sees a challenging year ahead.
The company warned that supply chain problems remain a serious risk factor, particularly for critical components.
Also, Mercedes noted high uncertainty surrounding geopolitics, citing ongoing conflict in Ukraine and the Middle East.
Rising friction between Western powers and China also presents a headwind.
For 2023, Mercedes expects flat growth as inflationary pressures and supply costs weigh on operations.
Return on sales for its core car business is forecast to drop 10-12% from 12-14% last year.
Mercedes Showing Confidence Despite Headwinds
In an interview, Mercedes Chairman Ola Källenius said that while supply issues impacted H2 2022 results, the situation should improve from Q2 2023 as new capacity comes online.
Regarding the cloudy macroeconomic picture, Källenius stated that Mercedes will not peel back investments.
R&D spending is at record highs to fund electric vehicle development and other future innovations.
Over €15 billion per year is slated for product development.
So, despite exceptional uncertainty surrounding inflation, geopolitics, and structural economic issues, Mercedes remains confident in its global growth strategy, particularly in China.
With a host of new battery-electric models launching in 2025, Mercedes is charging ahead to define the future of premium mobility.
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