Mercedes-Benz Group AG (ticker symbol: MBG) has reported robust financial results for the second quarter of 2024, demonstrating the company’s resilience and strategic acumen in a challenging global economic environment. The group’s performance was bolstered by strong operational efficiency, healthy sales of cars and vans, and a clear focus on maintaining profitability.
Performance Highlights
In Q2 2024, Mercedes-Benz Cars achieved an adjusted Return on Sales (RoS) of 10.2%, while Mercedes-Benz Vans reported an impressive 17.5% RoS. Mercedes-Benz Mobility posted an adjusted Return on Equity (RoE) of 8.4%. The group’s Earnings Before Interest and Taxes (EBIT) reached €4.0 billion, marking a 5% increase from Q1 2024, although it was slightly lower than Q2 2023’s €5.0 billion.
Cash Generation and Share Buyback
The Mercedes-Benz Group generated a solid free cash flow of €1.6 billion from its industrial business, reflecting strong cash conversion rates at both the cars and vans segments. The group has also continued its share buyback program with a volume reaching €2.8 billion in Q2 2024. Since the inception of the buyback programs in March 2023, the company has repurchased shares worth €5.1 billion as of June 30, 2024.
Strengthening Battery Development and Technological Advancements
The Mercedes-Benz Group has made significant strides in enhancing its battery development capabilities. The establishment of the new e-Campus competence center for battery technologies marks a pivotal development in this area.
Moreover, Mercedes-Benz has advanced its Automatic Lane Change capability in Europe, a testament to the company’s commitment to integrating cutting-edge technologies into its vehicles.
Q2 Financial Performance in Detail of Mercedes-Benz Group
Group Revenue and EBIT: The group revenue for Q2 2024 stood at €36.7 billion, slightly lower than the €38.2 billion reported in Q2 2023. The group’s EBIT was €4.0 billion, a 19.1% decrease from the €4.988 billion recorded in the same period last year.
Net Profit and Earnings Per Share: The net profit for Q2 2024 was €3.062 billion, down 15.9% from Q2 2023’s €3.641 billion. Earnings per share (EPS) also saw a decline, reaching €2.95 from €3.34 in Q2 2023.
Investments and R&D: The group’s investments in property, plant, and equipment totaled €0.9 billion in Q2 2024, up from €0.8 billion in Q2 2023. Research and development expenditure was €2.3 billion, slightly down from €2.4 billion in the previous year.
Divisional Performance of Mercedes-Benz Group
Mercedes-Benz Cars: The adjusted EBIT for Mercedes-Benz Cars was €2.8 billion, a decrease from €3.8 billion in Q2 2023. Despite lower sales volumes, the segment achieved an adjusted RoS of 10.2%, up from 9.0% in Q1 2024. Unit sales reached 496,712 in Q2 2024, a 7% increase from Q1, driven by improved product availability in key markets like China and the United States.
Mercedes-Benz Vans: The vans segment reported an adjusted EBIT of €834 million, up 5% from €792 million in Q2 2023. The adjusted RoS improved to 17.5% from 15.5% in the same period last year. Global sales remained stable at 103,435 units, with the division benefiting from healthy net pricing and favorable material costs.
Mercedes-Benz Mobility: This division saw its adjusted EBIT decline to €271 million from €448 million in Q2 2023, primarily due to a lower interest margin and higher credit risk costs. The adjusted RoE decreased to 8.4% from 12.8% in the previous year. The total portfolio remained steady at €135.7 billion, matching the year-end 2023 figure.
Outlook for 2024
The Mercedes-Benz Group maintains a cautious yet optimistic outlook for the remainder of 2024. The group expects unit sales of Mercedes-Benz Cars to remain at the prior-year level, with a potential increase in the second half of the year driven by the full availability of new E-Class and GLC models and a rise in Top-End Vehicle sales.
Adjusted RoS Guidance:
Mercedes-Benz Cars: 10%-11%
Mercedes-Benz Vans: 14%-15%
Mercedes-Benz Mobility: 8.5%-9.5%
The group anticipates a slight decrease in Group EBIT compared to the previous year, while the Group revenue is expected to remain stable. Free cash flow from the industrial business is projected to be slightly below the strong levels of 2023.
Geographical Market Insights:
Europe: Improved overall sentiment with steady market conditions.
China: Cautious outlook due to macroeconomic uncertainties and intense competition in the Entry and Core segments.
United States: Positive momentum with expected year-over-year growth in sales, particularly driven by the GLC model.
Conclusion
Mercedes-Benz Group AG’s Q2 2024 results highlight the company’s ability to navigate a challenging economic landscape while maintaining solid financial performance. With strategic investments in technology and battery development, coupled with robust cash generation and share buyback initiatives, Mercedes-Benz is well-positioned to achieve its financial targets and continue delivering value to its shareholders.