Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mercedes-Benz Group AG (MBGAF, Financial) reported solid sales numbers for cars and vans, with notable world premieres such as the Maybach SL and AMG GT special edition.
- The company is progressing in technology, demonstrated by advancements like level three autonomous driving with increased operating speed.
- Strong cash generation continues, with substantial shareholder returns including a EUR5.5 billion dividend and EUR4.3 billion in share buybacks.
- The company is executing a massive product launch initiative, confident in its product portfolio to serve the market flexibly between ICE and EV.
- Mercedes-Benz Group AG (MBGAF) maintains a strong focus on capital allocation and shareholder returns, with plans to seek further authorization for share buybacks.
Negative Points
- Q3 results were impacted by a deteriorating macro environment and competitive landscape, leading to lower than expected profitability.
- The company faced a weak quarter in the cars segment due to lower volume, unfavorable mix, and softer pricing.
- Electrified vehicle sales were down 15% due to subdued market demand for EVs.
- The company had to implement dealer support measures in China, impacting profitability.
- The market environment in China remains challenging, with strong competition affecting sales and pricing.
Q & A Highlights
Q: Given the challenging Q3 results, do you expect supplier and dealer compensations to continue, and how do you see order intake and pricing stabilizing?
A: Harald Wilhelm, CFO, explained that while there are significant moving parts in Q3 and Q4, supplier and dealer compensations are not expected to be a long-term issue. He anticipates these costs to decrease in 2025 as the market adjusts. Order intake is stable in the US and Europe, but China remains competitive. The shareholder return framework remains unchanged despite the tougher market environment.
Q: Can you provide more details on the situation in China, particularly regarding the S-Class and incoming orders for Q4?
A: Harald Wilhelm noted that while the macro environment in China is challenging, the underlying demand for the S-Class remains stable. The Q3 group sales were impacted by stock adjustments, but retail demand was higher, indicating a stable demand level moving into Q4.
Q: How do you plan to address the cost challenges and market-related headwinds going into 2025?
A: Harald Wilhelm emphasized that Mercedes-Benz will focus on cost efficiencies across all areas, including material, variable, and fixed costs. The company will also leverage its product offensive to extract more value from its offerings. Adjustments in capacity will be made based on demand levels.
Q: What are your expectations for the European CO2 compliance situation, and how do you see the EV share evolving?
A: Harald Wilhelm stated that achieving CO2 targets remains a priority, with a focus on increasing xEV sales. The current EV demand in Europe is lower than expected, and while 2025 looks challenging, Mercedes-Benz is prepared to meet targets with its upcoming product launches.
Q: Can you explain the strong cash conversion in Q3 and expectations for Q4?
A: Harald Wilhelm explained that the strong cash conversion was supported by working capital management and positive receivables. While some provisions will impact cash flow in Q4, the company expects to maintain a solid cash generation level for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
