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MERCEDES-BENZ’S latest earnings call saw the German automaker reveal a massive loss in profits for the third quarter, and significantly rising stock prices.
The company primarily attributed this loss to the cost of President Donald Trump’s auto industry tariffs, and a slump in Chinese sales.
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The total profit slump was 30.8%, resulting in a profit of €1.19 billion ($1.38 billion) being netted by the company, down €1.72 billion year-over-year.
This profit for the third quarter exceeded analyst expectations of €1.09 billion.
Despite this dip in sales, Mercedes-Benz maintained its full-year guidance despite this dip in profits.
General expenses also contributed to this slump, such as restructuring costs linked to a voluntary redundancy program in Germany which began in April.
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Accounting for the cost of these efforts and others, which amounted to €1.3 billion in one-time charges, softens this slump significantly.
Amidst these losses, the company also saw its shares rise more than 3.8% in early Wednesday trading on the German stock exchange.
These numbers, as well as the brand’s plan to buy back €2 billion worth of shares, are being seen as a commitment from Mercedes-Benz to its previous promise of streamlining operations.
The weak Chinese sales for the company were attributed primarily to competition from domestic manufacturers such as BYD and Xiaomi.
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This resulted in the sale of Mercedes-Benz vehicles in China dropping by 27% in the third quarter.
Mercedes-Benz is planning to introduce a semiautonomous vehicle in China later this fall which is likely to help combat this dip in sales.
“We are very aware of the challenges,” CEO Ola Källenius said of the brand’s troubles in China while adding that it has “a plan.”
The company is also planning to introduce more than 40 new models in the coming year, the powertrains of which will include fully electric cars, hybrids, and V8 internal combustion engines.]
Källenius also touched on the ongoing issue of the exportation prohibition of Nexperia semiconductor products made in China, reassuring that the company was working to resolve the issue.
“For the short term we’re covered, it goes without saying that we’re scurrying around the world to look for alternatives,” he explained.
DONALD Trump almost started a trade war after he threatened to slap steep tariffs on imports from Canada and Mexico.
The president believes the taxes were “worth the price” to stop the manufacture and import of the deadly drug fentanyl and end what he called the “RIPOFF OF AMERICA.”
However, Americans would see higher prices for fruits like avocados and tomatoes and manufactured products like cars or computers if the tariffs take effect, according to experts.
A trade showdown could cost families $1,000 and slow down general growth if prices spike – but Trump appears ready to risk it.
Trump slammed those opposing the tariffs, saying the US would no longer be the “stupid country” subsidizing others.
Trump acknowledged the tariffs could cause short-term economic pain.
The president threatened to whack levies on Canada and Mexico, but these tariffs are on a 30-day pause because Trump struck a deal with his Mexican and Canadian counterparts.
The 10% tariff on Chinese imports remains in place, and Beijing has issued a series of retaliatory measures, including 15% tariffs on coal and liquefied natural gas products plus 10% on some American cars.
Trump has also threatened to impose tariffs on EU countries but has not said when they would take effect or indicated how large they would be.
Källenius also emphasized the brand’s prioritization of improving efficiency and focus on the introduction of these new models, and the semi-AV in China.
Mercedes-Benz is also continuing to look at the United States market as one of growth, with Källenius confirming the brand intends to expand American production beyond its Alabama plant focused on SUVs.
However, Källenius declined to comment on whether or not the company was considering raising prices in America to combat the 15% import duty that went into effect on September 1.
CFO Harald Wilhelm also said the company expects many of its workers to depart by the end of the year as part of a group-wide restructuring aimed at cutting jobs and shifting production to lower-cost factories.
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These group-wide restructuring costs totaled €876 million ($1.02 billion) in the third quarter, but were mainly related to both Germany’s new voluntary redundancy program and optimization programs abroad.
These efforts are expected to cut costs by €5 billion by 2027.
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