Mercedes-Benz has reported a steep decline in profits, driven largely by challenges in the Chinese market. The luxury car manufacturer generated a profit of 10.4 billion euros last year, reflecting a significant 28 percent drop compared to the previous year. This decline comes as no surprise, as the company had already revised its profit expectations downwards in September.
China, the company’s most crucial market, has seen wealthy customers gravitating towards less expensive models, impacting Mercedes-Benz’s sales. For the year, global sales fell by 4.5 percent, amounting to 145.6 billion euros. The company’s earnings before interest and taxes (EBIT) also took a hit, dropping by nearly a third to 13.6 billion euros, although this was slightly better than analysts had anticipated.
The downturn in the Chinese market has eroded the high profitability that the company experienced in previous years. In 2024, the operating profit margin for the passenger car division fell to just 8.1 percent of sales, down from 12.6 percent the previous year, and even higher in the two years before that. As a result, the company announced a reduction in its dividend by one euro to 4.30 euros per share and indicated plans for a new share buyback program of up to five billion euros, pending approval at the annual general meeting.
Looking ahead, Mercedes-Benz expects the business environment to become even more challenging. The group forecasted that the margin before interest and taxes in the passenger car segment, adjusted for special effects, will only reach six to eight percent of sales in 2025. Sales are projected to remain slightly below last year’s levels, with a modest decline in car sales and a significant drop in earnings before interest and taxes.
4o mini
source:https://www.spiegel.de/wirtschaft/mercedes-benz-gewinn-bricht-wegen-schwachem-china-geschaeft-deutlich-ein-a-b028466c-0b0e-4749-b666-15707b0fe652
