Mercedes-Benz inventory falls on large Q3 earnings miss; money stream stays robust By Investing.com

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 section 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 customers amid an financial slowdown.

“The Q3 outcomes don’t meet our ambitions,” mentioned Mercedes CFO Harald Wilhelm and indicated that the corporate will ramp up cost-cutting measures to handle the influence.

One constructive facet was the corporate’s free money stream (FCF) which stood at 2.4 billion euros, above the consensus estimate of two billion euros.

“That is vital because it helps the dividend and capital return in 2025,” RBC Capital Markets analysts commented. “Capital return is central to our funding thesis for Mercedes.”

Jefferies analysts shared comparable feedback, noting that the “disappointing miss in Automotive margin [was] compensated by robust FCF.”

Mercedes-Benz now anticipates full-year automobile gross sales to be barely decrease than final yr, with fourth-quarter gross sales anticipated to be on par with the third quarter.