This statement from the company, which was revealed late Thursday, led to a decline in shares a company Automotive industry German luxury stocks fell 7.5 percent to their weakest level in nearly two months, also dragging down other shares. Cars European.
The company currently expects, according to what was reported by the German news agency “DPA”, that its annual profits before interest and taxes will be significantly lower than the levels of the previous year, while it had previously expected a slight decrease.
She said Mercedesheadquartered in Stuttgart: “GDP growth in China Further momentum lost due to weak consumption and continued decline in the sector. Real Estate“Noting that this decline affected the overall sales volume there, including the luxury sector.”
As a result, diversified sales for the second half of 2024 are expected to remain consistent with the first half, but weaker than originally expected, she added, noting that the second half of 2024 will see several valuation adjustments, and that the dynamic pricing environment is likely to remain.
“There is a huge amount of caution, I’m trying to put that diplomatically,” Chief Executive Ola Kallenius told analysts on a call following the announcement, adding that it’s not surprising that spending on expensive capital goods is being cut back in such circumstances.
As for how long that will last, he replied: “I don’t know, but I will remain cautious for the foreseeable future regarding China.”
The company expects adjusted return on sales to be between 7.5% and 8.5%, compared with the previous forecast of between 10% and 11%, and free cash flow for the Mercedes-Benz Group’s industrial business to be significantly below the previous year’s level.
As a result, Mercedes-Benz Group earnings before interest and taxes (EBIT) are now expected to be significantly below last year’s level of €19.7 billion ($22 billion), compared to the previous forecast of a slight decline.
According to LSEG estimates, the group’s earnings before interest and taxes (EBIT) are expected to reach €15.83 billion.
“While some investors were expecting a profit warning, we still view this news as a surprise, especially given its size and the lack of cautionary comments ahead of today’s report,” RBC analysts said.
Free cash flow for the industrial group’s business is also expected to be significantly lower than the previous year’s level.
As she pointed out BMW German automaker AG last week said weak demand in China was continuing to weigh on sales in the country, adding to the number of automakers facing difficulties in the world’s second-largest economy.
