Profit higher than expected: Expensive models keep Mercedes on course for growth

Despite the lack of chips and lockdowns in China, Mercedes-Benz is able to increase its sales.

Profit higher than expected: Expensive models keep Mercedes on course for growth

Despite the lack of chips and lockdowns in China, Mercedes-Benz is able to increase its sales. The German carmaker speaks of "improved pricing". However, the group is also benefiting from an ongoing trend in the car market.

Mercedes-Benz increased its profit in the second quarter despite falling sales in its passenger car division and, thanks to strong demand, is more confident about the year as a whole. From April to June, the operating result rose by six percent compared to the same period last year to 4.6 billion euros, as the Stuttgart-based group announced. This is in line with the expectations of the analysts polled by Refinitiv.

The reasons given by the carmaker were "improved pricing" and ongoing cost discipline. Sales climbed by seven percent to 36.4 billion euros, although the brand with the star sold seven percent less in the past quarter due to the shortage of semiconductors with 487,100 vehicles. However, rising prices and the trend towards more expensive vehicles played into the company's hands.

CEO Ola Källenius raised the forecast for the year and now expects a stronger increase in sales and increasing operating profit. Despite all the challenges in the economy worldwide, there are good reasons to look ahead with confidence, explained Källenius. "Above all, the continued strong demand from our customers worldwide and other important new products."

Also thanks to cost discipline, the decline in sales and higher raw material costs were offset. The prospects are difficult given the risks of the Ukraine war, which disrupts supply chains and drives up energy prices. Other negative factors are the very high inflationary pressure, rising interest rates and the uncertainty in the course of the corona pandemic, especially in China. Mercedes-Benz is preparing for geopolitical and economic headwinds. For example, solutions are being sought to reduce gas consumption in view of the heightened tensions caused by the Ukraine war.

The paint shop at the Sindelfingen plant, for example, can now be operated without gas in emergency mode. There is a potential for reducing gas consumption by around 50 percent if regional pooling is made possible. The return on sales for passenger cars improved by around one and a half percentage points to 14.2 percent. For the year as a whole, the Swabians raised the forecast range to twelve to 14 percent from the previous 11.5 to 13 percent.