Outlook

July 27, 2022 - Outlook raised: Mercedes-Benz Group revenue seen “significantly above” prior-year level and Group EBIT now seen “slightly above” prior-year level.

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 business activities, should it escalate beyond its current state.

In addition, the continued very high inflationary pressure for consumers and companies and the associated central bank increases in interest rates as well as ongoing bottlenecks in global supply chains make the outlook more difficult. Not least the further course of the pandemic, in particular in China, holds uncertainties for the expected development of the market.

Despite the macro risks, Mercedes-Benz continues to see healthy and high quality demand for its products for the second half of the year, in all core markets. Order books are solid and healthy demand is driven by a strong product portfolio which is further developing during the course of the year. Demand is seen remaining higher than supply.

Mercedes-Benz Cars

Mercedes-Benz Cars continues to expect a slight sales increase. Pricing and mix are expected to remain on a high level, with top-end vehicle sales growth seen at more than 10% year-on-year.

Between January and June, Mercedes-Benz Cars achieved an adjusted Return on Sales of around 15%. For the second half of the year, it is the ambition of the company to continue with this run rate, using the levers at its disposal on top-line and cost. However, material costs, higher research and development expenses and effects from the used car business are assumed to result in a negative effect of around 2 RoS points versus the H1 run rate, in the second half of 2022. Taking into account further potential market environment headwinds related to macro uncertainties, the company’s guidance for adjusted RoS for Mercedes-Benz Cars for the full-year is now at 12%-14%, rather than the 11.5% and 13% seen earlier. The target is to continue to compensate such risks through net pricing.

The cash conversion rate for Cars remains unchanged at between 0.8 to 1.0. Research and development spending is now expected to be “significantly 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 “significantly below” the prior-year level, rather than “at the prior-year level.”

Mercedes-Benz Vans

Sales are expected to remain “slightly above” the 2021 level and the adjusted Return on Sales is expected to remain at 8% to 10%. Investments in property, plants and equipment and research and development are 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.

Mercedes-Benz Mobility

The adjusted Return on Equity is seen in the range of 16% to 18%. Negative effects on EBIT are expected due to higher refinancing costs and lower contract volumes. Furthermore, the cost of credit risk is expected to trend towards its long-term average level.

Mercedes-Benz Group

Revenue this year is now seen “significantly above” the 2021 level, up from a previously expected “slightly above.” EBIT is now seen “slightly above” the prior-year level, rather than “at the prior-year level.” Free cash flow from the industrial business is now expected to be “at the prior-year level”, from a previously expected “slightly below” the 2021 level.

This page was revised based on the Q2 Interim Report 2022 and contains forward-looking statements.