Mercedes-Benz AG posted better-than-expected preliminary earnings in the first quarter as the automaker’s push further upmarket helped it overcome higher raw-material costs.
(Bloomberg) — Mercedes-Benz AG posted better-than-expected preliminary earnings in the first quarter as the automaker’s push further upmarket helped it overcome higher raw-material costs.
Mercedes delivered an adjusted return on sales of 14.8% on healthy net pricing and robust demand for its vans and luxury cars, it said late Thursday. That topped analysts’ estimates of 14.2%.
“The company beat across key segments,” Bernstein analysts led by Daniel Roeska said in a note. “Mercedes is fast-approaching a position to revise guidance upward later in the year.”
Read More: Mercedes Cars Become More Elusive After 43% Jump in Prices
The German manufacturer is trying to sell more top-end models like its S-Class sedan to bolster profits and help fund a costly shift to electric vehicles. Economic uncertainty and inflation have compounded the challenges for an industry dealing with persistent supply issues and profitability concerns sparked by Tesla Inc.’s recent price cuts.
“In a challenging market environment, we have once again demonstrated resilience,” Chief Financial Officer Harald Wilhelm said in a statement. “Strong pricing significantly outweighed headwinds from material costs and led to another quarter of solid financial results.”
The strategy took a knock late last year when it discounted prices for its flagship electric vehicles in China amid intensifying competition in the biggest auto market. Still, the automaker has successfully increased sales of high-margin vehicles such as the S-Class and G-Wagon offroader.
Mercedes is guiding for its automaking margin to be 12% to 14% this year, down from 14.6% in 2022. It plans to publish full results on April 28.
(Updates with analyst quote in third paragraph.)
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