By Dominic Chopping
Mercedes-Benz Group is scheduled to report results for the third quarter on Friday. Here is what you need to know.
REVENUE FORECAST: The German luxury-car company's group revenue is expected at 36.29 billion euros ($39.13 billion), according to a FactSet analyst poll, down from 37.2 billion euros in the third quarter of last year.
NET PROFIT FORECAST: Net profit is expected at 1.93 billion euros, down from 3.72 billion euros, according to FactSet.
Shares are down 4% over the past 12 months at 59.21 euros.
WHAT TO WATCH
--Mercedes-Benz cut full-year guidance last month due to a further deterioration of the macro environment, especially in China, flagging third-quarter earnings hit by weaker-than-expected top-end vehicle sales. Analysts at Barclays say the key concerns now revolve around where future margins will settle and the implied sustainable level of free cash flow in its automotive unit.
--The company recently said third-quarter car and van sales declined 3%, with 1% lower volumes in cars and a 13% decline in vans on the year. Regionally, car sales declined in both Europe and China while the U.S. was up.
--Analysts at HSBC look for an adjusted EBIT margin in the cars division of 6% and 14% for vans. "We understand that 3Q will mark the trough in terms of top-end vehicle sales as they are expected to pick-up again in 4Q driven by a better model availability."
--Despite the lower earnings, HSBC believes that cash generation will be solid and the bank looks for industrial free cash flow of 2 billion euros in the quarter.
--Any commentary around the company's shareholder returns will be watched as concerns around profitability and cash generation surface. Chief Financial Officer Harald Wilhelm recently moved to ease concerns, saying that there could be flexibility to exceed a 40% dividend payout ratio.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
October 24, 2024 08:10 ET (12:10 GMT)
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