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Mercedes-Benz reports profit rise but warns on slow demand in Europe

German carmaker says rapid spread of Covid-19 in China is also affecting sentiment

Profits at Mercedes-Benz rose by more than a quarter last year thanks to a focus on more profitable models. Photograph: Krisztian Bocsi/Bloomberg

Patricia Nilsson
Fri Feb 17 2023 - 10:34

Profits at Mercedes-Benz rose by more than a quarter last year thanks to a focus on more profitable models but it warned that demand in Europe was “sluggish” and that the market in China was feeling the effects of the rapid spread of coronavirus.

The Stuttgart-based group said on Friday that group earnings before interest and taxes increased 28 per cent to €20.5 billion in 2022, beating analyst expectations, while revenues rose 12 per cent to €150 billion.

But it warned that the outlook remained uncertain. Orders of new cars in Europe have slowed, while the spread of Covid-19 in China since lockdowns ended have had a “spill-over impact on sentiment in the first quarter”.

“We cannot control macro or world events, but 2022 is a case in point that we are moving in the right direction,” said chief executive Ola Källenius. Mercedes-Benz had become a more profitable company “thanks to our focus on desirable products and disciplined margin and cost management”, he added.

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While the global chip shortage, which left carmakers with unfinished models waiting for parts, has started to ease, the company said that supply chains were not back to their pre-pandemic normal. Last year, Mercedes experienced a “significant” increase in the price of some raw materials, particularly steel.

Citing exceptional uncertainty caused by the war in Ukraine, along with tensions between China and the west, the company said it expected sales in 2023 to remain at last year’s level and that pretax earnings would be “slightly below” 2022.

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“Mercedes’ strategy for higher pricing and mix continues to take shape,” said analysts at Citi. The company’s share price was up more than 2 per cent on Friday morning.

On Thursday evening, Mercedes announced it would start a two-year €4 billion share buyback programme in March. —Copyright The Financial Times Limited 2023

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