Mercedes-Benz continues to be successful with its luxury strategy and achieved an operating profit of 20.5 billion euros last year. The group announced this on Friday morning. Earnings before taxes and interest rose by 28 percent and significantly faster than sales, which increased by 12 percent to 150 billion.
For the current year, however, the people of Stuttgart are less optimistic. The global economy is exceptionally uncertain. In addition to the war in Ukraine, the concern led the development of trade between China, the EU and the United States. Inflation and the weaker economy would also complicate the prospects. The group therefore only expects sales for the current year to be at the level of the previous year and even expects a decline in profits.
However, sales in the People’s Republic give hope to the Stuttgarters, who are heavily dependent on their business in China. There are indications that momentum will return there after the Chinese New Year. Like many other manufacturers in its most important sales market, Mercedes was initially affected by the severe corona restrictions and, after the sudden easing, by the reluctance to buy due to the strong wave of infections.
share buyback program
In the past year, the group primarily took advantage of the lack of chips. Because the demand for cars significantly exceeded supply, the manufacturer was able to raise prices sharply and primarily used the few chips to produce more expensive, high-margin vehicles. With the easing of chip supply, this approach is being put to the test.
CEO Ola Källenius is quoted as saying in the statement that Mercedes has become a “more profitable company”. The keys to this are the “focus on desirable products and disciplined margin and cost management”. He saw the past year as proof that the strategic direction is right. The Swede announced a strategy update for the software in Mercedes cars for the coming week.
Källenius has been trying for a long time to increase the group’s share price. His strategy consists of three pillars: luxury, electric and China. So far, efforts have not been entirely successful. On Thursday evening, Mercedes announced that it would buy back shares for 4 billion euros within two years and thereby increase the share price. However, the two major Chinese shareholders should each hold no more than a tenth of the shares in the future.
After the figures were announced on Friday, the group initially increased slightly before the market. The company will propose a dividend of EUR 5.20 per share to the Annual General Meeting, 20 cents or 4 percent more than in the previous year.
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