– Mercedes-Benz Slides After China Slowdown “Becomes A Nightmare” Amid Profit Warning:
Mercedes-Benz shares in Germany tumbled on Friday after the luxury carmaker slashed its full-year profit outlook. The company warned that further deterioration of the macroeconomic environment, specifically in China, was the primary reason vehicle demand softened.
Mercedes has downgraded its outlook for the year, now forecasting earnings before interest and taxes (EBIT) to be “significantly below” last year’s levels. The automaker also revised its adjusted return on sales forecast to 7.5% to 8.5%, a sharp drop from the prior forecast of 10% to 11%.
“This affected the overall sales volume in China, including sales in the Top-End segment. Overall, the sales mix in the second half of 2024 is expected to remain unchanged versus the first half, and therefore weaker than originally expected,” Mercedes wrote in a statement.
Chief executive Ola Källenius informed analysts on a call that sliding vehicle demand stemmed “mainly [from] China” but noted slowdowns are materializing in other major markets, such as Europe. He said the carmaker is also being hit by “the [impact] of higher interest rates.”
Shares fell as much as 8.4%—the largest intraday decline since June 2020 and a two-year low—after some analysts said the outlook revision was “not that surprising” given mounting pressures from China. Other analysts are concerned about the company’s share buyback program.
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