(BFM Bourse) – The shares of the two auto manufacturers from across the Rhine found themselves under pressure this Tuesday in Frankfurt. The profitability of Mercedes’ auto division has disappointed while, at Volkswagen, Audi’s margins are weak.
The first publication of 2024 will not go down in history for German car manufacturers, at least for Volkswagen and Mercedes-Benz, since BMW will publish its results next week.
The first two groups unveiled their first quarter results on Tuesday, which were received freshly on the Frankfurt Stock Exchange.
Mercedes-Benz shares dropped 4.7% around 3:40 p.m., while its accounts turned out to be “even weaker than expected, both below the consensus and the company’s expectations”, summarizes Oddo BHF.
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“Weak results”
Revenues fell 4% to 35.87 billion euros while adjusted operating profit stood at 3.6 billion euros, down 34% year-on-year. However, analysts were expecting a much higher adjusted operating profit, at 3.8 billion euros, according to Stifel.
“The weakening of customer demand has become increasingly noticeable after the high orders due to the pandemic have largely subsided,” comments Mercedes Benz.
The group’s profitability is particularly weak in the “automobiles” division, with Mercedes also having a “vans” division and a “mobility” division, i.e. financial, leasing and fleet management services.
The “automotive” division published an adjusted operating margin of 9%, compared to 10.2% expected by the consensus and while the group was targeting a rate at the bottom of a range between 10% and 12%.
The group explained in particular that it had suffered from bottlenecks in its supply chain which affected the availability of its most high-end vehicles.
Mercedes Benz, on the other hand, confirmed all of its prospects for the year 2024, in particular an adjusted operating margin of between 10% and 12% for its “automobiles” division. But overall these are “weak results” with fundamentals “which are eroding”, judges Oddo BHF.
Audi’s margin at half mast at Volkswagen
Volkswagen is doing barely better on the stock market, its shares falling 4.4%. The revenues of the group with ten brands were in line with expectations at 75.5 billion euros. But this is not the case for the operating profit which stood at 4.6 billion euros, thus being 7% below the consensus while the corresponding margin stood at 6.1% against 6.5 % expected, according to figures cited by UBS.
Free cash flow also disappoints. Volkswagen suffered a cash outflow of more than 3 billion euros in its automotive division, when analysts expected 921 million euros of cash burned for the quarter.
“As expected, our first quarter results show a slow start to the year,” commented CFO Arno Antlitz in a press release.
Analysts point to Audi’s low operating margin, at 3.4%. By restating certain exceptional effects, Stifel calculates a rate of 6.1% which remains “still very low”, argues the bank. Porsche, which had already published its first quarter results separately, saw its operating margin fall from 18.2% to 14.2%.
Volkswagen also reiterated its annual objectives, namely an increase of 5% in its revenues as well as an operating margin of between 7% and 7.5%.
Julien Marion – ©2024 BFM Bourse