Mercedes-Benz shares climb 5% on share buyback, despite 'exceptional' uncertainty ahead

Mercedes-AMG GT 43 4MATIC+ on show at Brussels Expo on January 9, 2020 in Brussels, Belgium. 

Sjoerd Van Der Wal | Getty Images News | Getty Images

Mercedes-Benz shares gained round 5% on Thursday morning after the German carmaker beat fourth-quarter earnings expectations and introduced a brand new share buyback program, regardless of warning of “exceptional” dangers within the yr forward.

Fourth-quarter earnings earlier than curiosity and taxation (EBIT) got here in at 4.33 billion euros ($4.7 billion), barely forward of consensus expectations, taking the full-year determine to 19.66 billion euros. Revenues rose 2% in 2023 to 153.2 billion euros from 150 billion the earlier yr.

The group additionally introduced an extra share buyback program value as much as 3 billion euros, with the repurchased shares subsequently canceled.

However, Mercedes-Benz warned that provide chain bottlenecks for important parts stay a “significant risk factor,” and stated an “exceptional degree of uncertainty” surrounds geopolitical occasions and commerce coverage, significantly within the type of the Russia-Ukraine and Middle East conflicts and tensions between Western powers and China.

The firm sees flat progress in 2024 as inflation and provide chain prices chunk, whereas adjusted return on gross sales for Mercedes-Benz Cars is predicted to slide to a variety of 10% to 12% from 12-14% in 2023.

Automotive analysts at Jefferies stated in a reactive notice Thursday that though there have been no main surprises within the earnings, the money return coverage was “a sign of confidence and consistent with the premium/luxury positioning, with buyback set to keep EPS (earnings per share) growing.”

Mercedes-Benz Chairman Ola Källenius instructed CNBC on Thursday that the corporate was effectively positioned to beat the varied macroeconomic headwinds.

“Today we’re presenting very strong numbers for Mercedes-Benz Cars, and really a standout year for our light commercial van division,” he stated.

Revenue at Mercedes-Benz Vans rose by 18% year-on-year to twenty.3 billion euros and adjusted EBIT surged 59% to three.1 billion euros, whereas unit gross sales climbed 8% to a report 447,800 items.

Yet Källenius famous that provide constraints did impression the corporate within the second half of 2023 and can proceed to take action within the first quarter of 2024.

“But we are working through that with our partner, we are now putting more capacity in that has been prepared over the last months, so during this first quarter and towards the end of it, I think we will have worked through those issues, so that in the second quarter we can come back to a more normal supply situation,” he added.

Although he acknowledged that the macroeconomic surroundings was “challenging” in opposition to a backdrop of escalating battle and geopolitical tensions, together with persistent excessive rates of interest and structural financial headwinds in China, Källenius stated Mercedes wouldn’t be scaling again its investments in future growth.

“That doesn’t mean though that we’re retreating from any one market, we always try to exploit the maximum potential for us in the more than 150 countries that we’re active in,” he instructed CNBC’s Annette Weisbach, including that the corporate was not “peeling back” its investments both.

“In fact, we’re actually in the highest level of investment in the history of the company, readying a whole new generation of products — some of which will be launched this year, but really a product offensive especially on the battery electric vehicle side that starts in 2025, goes through 2026 and beyond,” Källenius stated.

“So we are full speed ahead in terms of developing new technologies, innovations and a broad set of products for the years to come.”