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Mercedes Slides On Profit Plunge, Weak Car Guidance

Mercedes shares declined in Germany on Thursday after the struggling automaker reported a nearly one-third drop in 2024 profits, pressured by softening demand in China and sluggish electric vehicle sales. Analysts at Bernstein characterized the 2025 outlook for passenger cars as 'predictably weak.' Here's a snapshot of the 2024 fiscal year financial results. The focus is on deteriorating EBIT margin (courtesy of Bloomberg): Ebit EU13.60 billion, -31% y/y Dividend per share EU4.30 vs. EU5.30 y/y, estimate EU4.32 Profit EU10.41 billion, -28% y/y, estimate EU9.87 billion Sales EU145.59 billion, -4.5% y/y, estimate EU145.85 billion Industrial free cash flow EU9.15 billion, estimate EU8.49 billion Vans adjusted return on sales 14.6% vs. 15.1% y/y, estimate 14.8% Vans adjusted Ebit EU2.83 billion, estimate EU2.87 billion Mercedes announced plans to slash 10% of production costs through 2027 and provided a dismal outlook for this year. It expects lower sales and guided profit margins lower than Wall Street's expectations… 2025 Forecast: Sees Cars adjusted return on sales 6% to 8%, estimate 7.91% (Bloomberg Consensus) Sees Vans adjusted return on sales 10% to 12%, estimate 12.8% 'To ensure the company's future competitiveness in an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger,' CEO Ola Kallenius wrote in a statement. With CEO Kallenius at the helm, Mercedes has prioritized producing higher-end vehicles while shifting away from entry-level models. There was a time—many years ago—when the automaker focused on building cars for executives. However, weak demand for Maybachs and G-Wagons in China and other markets has pressured this strategy. Kallenius expects margins margins upwards of 10% by 2027. Like many others in Europe, automakers have been pressured by weakening global demand, a dismal economic environment in Germany, and Chinese competitors such as BYD. At the same time, trade tensions with the US are another headwind for EU automakers. Click here to read more Also read: Kuwait To Impound Noisy Cars To Curb Reckless Driving