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Good Q1 but Mercedes worried about Ukraine and China

Good Q1 but Mercedes worried about Ukraine and China

Mercedes-Benz Group said it posted “strong financial results” in the first quarter of 2022, buoyed by a focus on premium vehicles and premium vans, coupled with ongoing cost savings.

Adjusted return on sales for autos was 16.4% and up to 12.6% for Mercedes-Benz Vans as the pandemic, semiconductor shortages and the war in Ukraine continued to affect business.

Group EBIT increased by 11% to EUR 5.2 billion. Earnings were boosted by a gain of EUR 918 million from the sale of its own Canadian retail business and the partial sale of MB Grand Prix, bringing nearly EUR 709 million in adjustment costs for industrial operations in Russia and EUR 281 million in costs related to diesel vehicles were compensated.

After the attack on Ukraine, Mercedes-Benz has stopped exporting passenger cars, vans and spare parts to Russia and stopped local production. Suppliers are moving production to locations other than Ukraine and the automaker has changed services at some plants to avoid downtime and maintain production.

Despite claimed strong demand, Mercedes-Benz Cars unit sales fell 10% to 487,008 vehicles, but sales were up 8%. Deliveries of top vehicles increased by 5% to 78,000 units and now represent 16% of the total volume. Sales of hybrid and electric models increased by 19% to 74,000 vehicles.

The automaker posted a 21% increase in adjusted EBIT to EUR 4,243 million and an adjusted return on sales of 16.4%.

Mercedes-Benz Vans unit sales were flat despite a semiconductor shortage as volume in North America hit a new high in the first quarter. The adjusted return on sales increased from 9.7% to 12.6%.

For the remainder of the year, the automaker said: “Geopolitical and macroeconomic conditions continue to be characterized by an exceptional degree of uncertainty, including the war in Ukraine, its impact on supply chains and the evolution of commodity and energy. .Further effects from the rapidly evolving situation in Russia and Ukraine are currently unknown, but could potentially have substantial negative impacts on our business if it escalates beyond the current state.”

It expects supply difficulties and the pandemic to affect businesses for the remainder of 2022.

“Strict COVID-19 countermeasures in China pose uncertainties for the expected development of the market, supply chain and manufacturing.”

Mercedes-Benz Cars continues to expect a slight increase in sales and an adjusted RoS between 11.5% and 13%, with the full year at the higher end of this range.

Van sales are expected to rise slightly above 2021 levels and the adjusted RoS is expected to remain at 8% to 10%.

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