April 27, 2022 - Outlook 2022: Guidance confirms strategic progress.
The geopolitical and macroeconomic conditions continue to be characterised by an exceptional degree of uncertainty, including the war in Ukraine, its impacts on supply chains, and the development of prices for raw materials and energy. Further effects due to the rapidly changing situation in Russia and Ukraine are not currently known but could possibly have substantial negative consequences for our business activities, should it escalate beyond its current state.
Mercedes-Benz expects supply constraints related to semiconductors and other industrial upstream products and the COVID-19 pandemic to impact business for the remainder of 2022 and continues to monitor supply chain risks closely to react flexibly if needed. Strict COVID-19 countermeasures in China hold uncertainties for the expected development of the market, supply chain and production.
Mercedes-Benz Cars continues to expect a slight sales increase and an adjusted Return on Sales between 11.5% and 13% with full-year RoS seen at the higher end of this range. Price and mix are expected to remain on a high level, with top-end vehicle sales growth seen at more than 10% year-on-year. Raw material and other inflationary risks are seen for the remainder of the year. The target is to continue to compensate such risks through net pricing. Research and development spending is expected to remain unchanged at slightly above the prior-year level, mainly due to the development of the MMA and AMG.EA platforms. Investments in property plants & equipment are now expected to be at the prior-year level, rather than slightly above the prior-year level.
Sales are expected to rise slightly above the 2021 level and the adjusted Return on Sales is expected to remain at 8% to 10% and is expected at the upper half of this corridor. Investments in property plants and equipment and research and development is expected to remain significantly above prior-year levels due to spending to upgrade existing combustion engine platforms and to develop the electric VAN.EA platform.
The adjusted Return on Equity is seen in the range of 16% to 18%. Margin headwinds are expected due to higher refinancing costs and contract volumes are seen lower. Furthermore, the cost of credit risks is expected to normalize.
Revenue is seen slightly above 2021 while EBIT is seen at the prior-year level. Free cash flow from the industrial business is expected to remain at slightly below the 2021 reference.