Mercedes-Benz Group AG’s sharpened focus on high-end passenger cars and premium vans, combined with tight cost control, helped to lift Earnings Before Interest and Taxes (EBIT) by 28% to €20.5 billion (2021: €16.0 billion) last year, outpacing a 12% rise in revenue to €150.0 billion (2021: €133.9 billion) during the same period.
In its first year after the Daimler Truck spin-off, Mercedes-Benz Group continued its transformation amid geopolitical and macroeconomic challenges. Strong results underline the improved profitability, even as the COVID-19 pandemic and semiconductor supply-chain bottlenecks and the fallout from Russia’s war against Ukraine continued to affect the business.
”We have redesigned Mercedes-Benz to be a more profitable company thanks to our focus on desirable products and disciplined margin and cost management. We cannot control macro or world events, but 2022 is a case in point that we are moving in the right direction,” said Ola Kaellenius, Chief Executive Officer of Mercedes-Benz Group AG.
Transformation accelerated
Mercedes-Benz expanded its offering of battery electric vehicles to 9 cars and 4 vans, including the new EQS SUV and EQE SUV and most recently unveiled a new eSprinter. To scale manufacturing of zero-emission vehicles, the Mercedes-Benz cars and vans production network was retooled, and new deals with suppliers were struck.
Mercedes-Benz will source battery cells from a new factory built by Contemporary Amperex Technology Co., Ltd (CATL) in Debrecen, Hungary. An annual supply agreement for an average 10,000 tons of lithium hydroxide from Canadian-German start-up Rock Tech Lithium Inc. was signed. In addition, Mercedes-Benz announced plans to launch a global high-power charging network across North America, Europe, China and other key markets.
Divisional results
In a challenging macroeconomic environment, Mercedes-Benz Cars sold 2,040,719 vehicles (+5%). In line with the strategy to focus on EVs, Mercedes-Benz had strong BEV sales of 149,227 units incl. smart (+67%). Sales in the Top-End segment increased by 8% driven by the S-Class (+6%) and additionally its all-electric version EQS, with more than 23,400 vehicles sold. Q4 marked the best sales quarter for this all-electric flagship. Furthermore, Mercedes-Maybach achieved a new record year with sales up 41%. Strong sales of C-Class, the top-seller GLC and the new EQE led to a rise in sales in the Core segment of 9%. The adjusted Return on Sales (RoS) for Mercedes-Benz Cars rose to 14.6% from 13.1% in the year-earlier period.
Outlook
The global economy faces an exceptional degree of uncertainty regarding geopolitical and macroeconomic developments such as the war in Ukraine, the development of trade between China the European Union and the United States, and the further course of the COVID-19 pandemic. These may impact supply chains and the development of prices for raw materials and energy. In addition, continued inflationary pressure for consumers and companies and the associated central bank increases in interest rates, as well as a more pronounced growth slowdown in the economy, make the outlook more difficult. The worldwide shortage of semiconductors is easing, however individual issues remain, causing supply constraints.
Overall demand: In Europe, incoming orders are more sluggish, however the order bank supports sales into the first half of the year. In the United States, demand is seen on a good level. In China, the fourth-quarter COVID-19 effect has led to a spill over impact on sentiment in the first quarter. Momentum is seen returning post Chinese New Year, preliminary indications show.
Sales guidance: The company is taking a prudent view and sees unit sales of Mercedes-Benz Cars at the prior-year level. Overall Top-End vehicle sales are expected to be slightly above prior year, thanks to new additions to the portfolio, including the new EQS SUV and later the Mercedes-Maybach EQS SUV. Sales of battery electric vehicles (BEV) are expected to approximately double.
The adjusted Return on Sales (RoS) is expected in the range of 12% to 14%. Net pricing is expected to be slightly positive. Based on current assumptions it is targeted to compensate inflation-related cost increases, supply chain interruptions and one-time commodity charges. The used vehicle business is expected to be slightly negative versus 2022. Research & Development spending is expected to be slightly above the prior year. Investments in property plant & equipment are seen significantly above, mainly due to the MMA platform.
Total Mercedes-Benz Vans sales are seen flat and the adjusted RoS is seen in the range of 9% to 11%. Net pricing is expected to remain flat. Based on current assumptions, it is targeted to compensate inflation-related cost increases, supply chain interruptions, and one time commodity charges. Investment in property, plants & equipment and research & development spending are seen significantly above the prior-year level due to investments into the VAN.EA electric platform.
The portfolio volume of Mercedes-Benz Mobility is seen slightly lower. The adjusted Return on Equity is seen in the range of 12% to 14% for 2023. This includes Operational Expenditures (OpEx) increases of the recently announced charging network.
The Mercedes-Benz Group expects the Group’s revenue in 2023 to remain at the prior-year level. In a market environment that remains challenging, the Group expects EBIT to be slightly below the previous year’s level based on the development of the segments. The Mercedes-Benz Group expects the Free Cash Flow of the industrial business at the previous year’s level in 2023. Higher tax payments are expected than in the previous year.
