April 27, 2022 – Mercedes-Benz Group AG achieved strong financial results in the first quarter of 2022, boosted by pricing power, the sharpened focus on top-end vehicles and premium vans, combined with ongoing cost discipline. These measures helped to lift the adjusted Return on Sales at Mercedes-Benz Cars to 16.4% and to 12.6% for Mercedes-Benz Vans even as the COVID-19 pandemic, semiconductor supply-chain bottlenecks and war in Ukraine continued to impact business.
Group EBIT rose 11% to €5.2 billion (Q1 2021: €4.7 billion). Earnings were impacted by a positive €918 million gain from the sale of Canadian own retail operations and the partial sale of MB Grand Prix, nearly offsetting €709 million in expenses tied to adjustments of industrial business activities in Russia and €281 million in expenses related to diesel vehicles.
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In the wake of Russia’s attack on Ukraine, Mercedes-Benz suspended the export of passenger cars, vans and spare parts to Russia and halted local manufacturing. Furthermore, the company is in close contact with suppliers that have exposure to Ukraine with a view to safeguarding supply chains. This includes among other things, transferring production to other locations within the supplier network. Mercedes-Benz has adapted shift plans at some plants and taking advantage of its flexible manufacturing system to avoid downtime and maintain production.
Mercedes-Benz reasserted its claim to leadership in the electric era. In April, the Mercedes-Benz Vision EQXX demonstrated world-beating efficiency by driving more than 1,000 kilometres on a single charge under real-world conditions. The EQS SUV was presented and the EQE was launched in the market. That’s after Mercedes-Benz opened a new battery plant in the United States in the first quarter, as part of a broader push to ramp up global production of electric vehicles this year.
In this challenging environment resilience and pricing power are crucial. Our sharpened focus on desirable top-end and electric vehicles, combined with ongoing cost discipline, allowed us to deliver strong earnings despite numerous headwinds. On this foundation we continue to transform our business by growing the luxury business, scaling up production of electric vehicles and accelerating software development.
Harald Wilhelm
Member of the Board of Management of Mercedes-Benz Group AG. Finance & Controlling/Mercedes-Benz Mobility
Investments, free cash flow and liquidity
The free cash flow of the industrial business in the first quarter amounted to €1,216 million (Q1 2021: €1,297 million). The adjusted free cash flow of the industrial business was €1,210 million (Q1 2021: €2,505 million). The net liquidity of the industrial business amounted to €22,706 million (end of 2021: €21,005 million). The Group’s investments in property, plant and equipment in the first quarter totalled €855 million (Q1 2021: €1,186 million). Of this amount €0.8 billion (Q1 2021: €1.1 billion) was attributable to Mercedes-Benz Cars and €18 million to Mercedes-Benz Vans (Q1 2021: €29 million). Research & development expenditure amounted to €1,979 million (Q1 2021: €2,414 million) including important upfront investments in future products. At €1.9 billion (Q1 2021: €1.9 billion), Mercedes-Benz Cars accounted for a majority of the research and development expenditure. During the reporting period, Mercedes-Benz Vans had research and development expenditure of €84 million (Q1 2021: €119 million).
Divisional results
Despite strong demand, sales at the Mercedes-Benz Cars decreased by 10% to 487,000 vehicles (Q1 2021: 538,900) mainly due to semiconductor supply bottlenecks, COVID-19 lockdowns as well as the war in Ukraine. Nonetheless, revenue rose 8% highlighting the pricing power and ability to improve product mix even in volatile markets. Deliveries of top-end vehicles, which include Mercedes-Maybach, Mercedes-AMG, G-Class, S-Class, GLS and EQS, rose 5% to 78,000 vehicles during the same period. Top-end vehicles now account for 16% of overall volume. Sales of Mercedes-Benz Cars hybrid and electric models rose 19% during the quarter to 74,000 vehicles.
This resulted in a 21% rise in adjusted EBIT to €4,243 million and an adjusted Return on Sales of 16.4%. The adjusted CFBIT decreased to €1.7 billion due to working capital effects caused mainly by semiconductor supply constraints as well as logistics issues related to Ukraine/Russia and China.
At Mercedes-Benz Vans, unit sales remained at the prior-year level, despite semiconductor shortages as sales of Mercedes-Benz Vans (Sprinter and Metris) reached a new high in the first quarter in North America. The adjusted Return on Sales (RoS) for Mercedes-Benz Vans rose to 12.6% from 9.7% in the year-earlier period, reflecting healthy mix and pricing. The T-Class world premiere followed the introduction of the new Citan, which is being well received thanks to strong market demand.
At Mercedes-Benz Mobility, new business volume decreased due to the trucks spin-off, supply bottlenecks and lower penetration rates mainly in North America. New business in Russia was suspended and credit reserves for the Russian portfolio were raised. Outside of Russia the portfolio quality remains strong. Mobility services and fleet business performance and margins improved, benefiting from lower refinancing costs compared with the year-earlier period. Adjusted EBIT increased slightly with a Return on Equity of 20.2%.
This page contains forward-looking statements.
