Mercedes-Benz shares climb 5% on share buyback, regardless of ‘distinctive’ uncertainty forward

Mercedes-Benz shares gained round 5% on Thursday morning after the German carmaker beat fourth-quarter earnings expectations and introduced a brand new share buyback program, regardless of warning of “distinctive” dangers within the yr forward.

Fourth-quarter earnings earlier than curiosity and taxation (EBIT) got here in at 4.33 billion euros ($4.7 billion), barely forward of consensus expectations, taking the full-year determine to 19.66 billion euros. Revenues rose 2% in 2023 to 153.2 billion euros from 150 billion the earlier yr.

The group additionally introduced an extra share buyback program price as much as 3 billion euros, with the repurchased shares subsequently canceled.

Nevertheless, Mercedes-Benz warned that provide chain bottlenecks for crucial parts stay a “vital danger issue,” and stated an “distinctive diploma of uncertainty” surrounds geopolitical occasions and commerce coverage, significantly within the type of the Russia-Ukraine and Center East conflicts and tensions between Western powers and China.

The corporate sees flat progress in 2024 as inflation and provide chain prices chew, whereas adjusted return on gross sales for Mercedes-Benz Vehicles is predicted to slide to a spread of 10% to 12% from 12-14% in 2023.

Automotive analysts at Jefferies stated in a reactive word Thursday that though there have been no main surprises within the earnings, the money return coverage was “an indication of confidence and in step with the premium/luxurious positioning, with buyback set to maintain EPS (earnings per share) rising.”

Mercedes-Benz Chairman Ola Källenius advised CNBC on Thursday that the corporate was properly positioned to beat the assorted macroeconomic headwinds.

“As we speak we’re presenting very robust numbers for Mercedes-Benz Vehicles, and actually a standout yr for our mild business van division,” he stated.

Income at Mercedes-Benz Vans rose by 18% year-on-year to twenty.3 billion euros and adjusted EBIT surged 59% to three.1 billion euros, whereas unit gross sales climbed 8% to a file 447,800 items.

But Källenius famous that provide constraints did influence the corporate within the second half of 2023 and can proceed to take action within the first quarter of 2024.

“However we’re working by means of that with our associate, we are actually placing extra capability in that has been ready during the last months, so throughout this primary quarter and in direction of the tip of it, I feel we may have labored by means of these points, in order that within the second quarter we are able to come again to a extra regular provide state of affairs,” he added.

Though he acknowledged that the macroeconomic setting was “difficult” towards a backdrop of escalating battle and geopolitical tensions, together with persistent excessive rates of interest and structural financial headwinds in China, Källenius stated Mercedes wouldn’t be scaling again its investments in future growth.

“That does not imply although that we’re retreating from anyone market, we at all times attempt to exploit the utmost potential for us within the greater than 150 international locations that we’re energetic in,” he advised CNBC’s Annette Weisbach, including that the corporate was not “peeling again” its investments both.

“In reality, we’re truly within the highest stage of funding within the historical past of the corporate, readying a complete new era of merchandise — a few of which might be launched this yr, however actually a product offensive particularly on the battery electrical automobile aspect that begins in 2025, goes by means of 2026 and past,” Källenius stated.

“So we’re full pace forward when it comes to creating new applied sciences, improvements and a broad set of merchandise for the years to return.”