Mercedes Q3 earnings take hit on subdued sales, supply chain snags


  • EBIT down 6.8% to 4.8 bln euros in Q3
  • Pricing competition, supply chain snags weigh on earnings
  • Adjusted returns for cars expected at lower end of forecast

BERLIN, Oct 26 (Reuters) – Mercedes-Benz (MBGn.DE) expects to maintain its sales rate next quarter but will likely hit the lower end of its adjusted return forecast for cars this year due to inflation, high interest rates and geopolitical uncertainty, it said.

The luxury carmaker on Thursday reported a 12.4% adjusted return on sales in its cars division in the third quarter. It expects to be on the lower end of a 12-14% forecast for the year because of price competition and supply chain issues.

Earnings before interest and taxes (EBIT) across the Mercedes-Benz Group fell 6.8% to 4.8 billion euros ($5.1 billion), slightly above consensus as its vans earnings jumped 44% to 715 million euros with an adjusted return on sales of 15%.

Group revenue was down 1.4% at 37.2 billion euros.

Mercedes-Benz described the market environment as “subdued” and “marked by intense price competition, particularly in the electric vehicle segment”.

Carmakers from Ford (F.N) to Tesla (TSLA.O) have been slashing prices throughout the year in markets from the United States to China to stoke demand, particularly in the EV market, but Mercedes-Benz has broadly resisted following suit as it focuses on boosting margins over volume sales.

But higher inflation, a 329-million-euro headwind from foreign exchange, and supply chain-related costs dampened third-quarter earnings, the company said, echoing Porsche which warned in their Q3 results on Tuesday that the luxury sector was not immune to macroeconomic woes.

The car maker earlier this month reported a drop in overall third-quarter sales of 4%, with top-end sales down 11%, partly caused by model changeovers and a shortage in 48-volt systems supplied by Bosch.

Car revenue dipped 3.8% due to the fall in deliveries but the average selling price remained stable, the company said.

Looking ahead, it expects the rate of sales from the first three quarters to remain at around the same pace in the fourth quarter, and did not adjust its full-year sales target of flat growth.

($1 = 0.9485 euros)

Reporting by Victoria Waldersee; editing by Rachel More and Jacqueline Wong