Investing.com — Mercedes-Benz (OTC:) shares fell greater than 2.5% in European buying and selling Friday after the German carmaker reported a pointy 64% drop in third-quarter earnings inside its core automobile division, falling considerably wanting analyst expectations.
Adjusted earnings earlier than curiosity and taxes (EBIT) within the automobile unit fell to 1.2 billion euros, lacking the consensus forecast of three.19 billion euros, in accordance with LSEG.
The EBIT margin within the automobile phase got here in at 4.7%, which was additionally beneath the 5.4% anticipated by analysts.
The decline displays a continued pullback in luxurious spending by Chinese language shoppers amid an financial slowdown.
“The Q3 results do not meet our ambitions,” mentioned Mercedes CFO Harald Wilhelm and indicated that the corporate will ramp up cost-cutting measures to handle the influence.
One optimistic facet was the corporate’s free money move (FCF) which stood at 2.4 billion euros, above the consensus estimate of two billion euros.
“This is important as it supports the dividend and capital return in 2025,” RBC Capital Markets analysts commented. “Capital return is central to our investment thesis for Mercedes.”
Jefferies analysts shared related feedback, noting that the “disappointing miss in Car margin [was] compensated by strong FCF.”
Mercedes-Benz now anticipates full-year automobile gross sales to be barely decrease than final 12 months, with fourth-quarter gross sales anticipated to be on par with the third quarter.
