© Reuters.
Mercedes-Benz (OTC:) (ticker: MBG) mentioned its monetary technique and outlook throughout the Annual Outcomes Press Convention Name in 2023, highlighting a deal with sustaining margins by way of price administration and disciplined funding, significantly within the electrical automobile (EV) section. The corporate expressed confidence in its money stream stability and potential for share buybacks, whereas additionally contemplating divestiture from the Daimler Truck stake to boost money stream. Mercedes-Benz is adjusting its quantity and pricing methods to align with market situations, aiming for secure pricing and prioritizing market share over aggressive pricing for sustainable development. They’re assured in reaching their EBITDA margin goal of 16% by 2023 and are aiming for a 10-12% margin in 2024. The corporate additionally touched on its efficiency in China and its plans to launch the brand new E-Class within the aggressive Chinese language EV market.
Key Takeaways
- Mercedes-Benz plans to take care of margins by way of price focus and disciplined funding in EVs and infrastructure.
- The corporate expects money stream stability and sees potential for share buybacks, with a attainable divestiture from the Daimler Truck stake.
- Aiming for money conversion targets of 0.8 to 1 for 2024 onwards.
- EBITDA steering of 16% by 2022-2023 is on observe, with a deal with decreasing mounted prices and investments by 20% by 2025.
- Plans to extend xEV share for CO2 emission targets and launching new fashions just like the EQS in June 2024.
- The corporate goals to defend market share by way of product substance and is cautious about aggressive pricing.
- EBIT margin for EVs is focused at double digits, aiming for 12-14%.
- Strong efficiency in China in 2023, with a cautious outlook for 2024 and a brand new E-Class launch for momentum.
- A Mercedes Benz (ETR:) ESG Convention is scheduled for March 20.
Firm Outlook
- Mercedes-Benz is assured in its present structure supporting future updates and improvement.
- The medium-term plan has been up to date to regulate quantity based mostly on market situations and product launches.
- Investments are on observe, and the corporate goals for continued effectivity enhancements.
Bearish Highlights
- There are uncertainties relating to policymaking for EVs.
- The impression of shedding 100,000 items in 2023 on EBIT suggests that almost all is probably not recouped in 2024.
Bullish Highlights
- The corporate is assured in reaching an EBITDA margin of 16% by 2023.
- Divestiture from Daimler Truck stake post-lockup interval may increase free money stream.
- Robust efficiency in China is predicted to proceed, with disciplined development within the aggressive EV market.
Misses
- Market share losses past 2024 may happen if the corporate can’t preserve secure pricing and market share by way of product substance.
Q&A Highlights
- Mentioned BEV pricing, residual values, and capitalization, with a deal with worth creation for the long run.
- Potential for a secure or rising dividend, contemplating exceeding a 40% payout ratio.
- Participation in discussions on protectionism between the EU and China.
In abstract, Mercedes-Benz is navigating by way of a important section within the automotive business because it transitions in direction of electrical mobility, balancing the necessity for funding in new applied sciences with the need to take care of monetary stability and shareholder worth. The corporate’s technique revolves round disciplined price administration, strategic investments, and a deal with sustaining a powerful market place. With a watch on the long run, Mercedes-Benz is positioning itself to capitalize on the rising EV market whereas making certain its monetary targets are met.
InvestingPro Insights
As Mercedes-Benz (ticker: MBG) continues to navigate the aggressive and quickly evolving automotive panorama, significantly within the EV section, it is vital to think about the corporate’s monetary well being and market place. In accordance with InvestingPro knowledge, Mercedes-Benz boasts a strong market capitalization of $80.52 billion, underscoring its vital presence within the business. The corporate’s P/E ratio stands at a horny 5.02, which additional adjusts to 4.64 when contemplating the final twelve months as of Q3 2023, indicating that the inventory might be undervalued relative to earnings.
InvestingPro Suggestions spotlight that Mercedes-Benz has a excessive shareholder yield and has constantly raised its dividend for 3 consecutive years, with a notable dividend yield of seven.43% as of 2023. This dedication to returning worth to shareholders is commendable, particularly contemplating the corporate’s capacity to take care of dividend funds for 13 consecutive years. Furthermore, the steadiness of Mercedes-Benz is mirrored in its low worth volatility, reassuring buyers on the lookout for a much less turbulent funding expertise.
With the corporate’s robust deal with sustaining margins and managing prices, as mentioned within the article, these monetary metrics present extra context to the general strategic course of Mercedes-Benz. The corporate’s efforts to maintain money stream and think about strategic divestitures, just like the Daimler Truck stake, are aligned with its goal to boost shareholder worth.
For readers all for deeper evaluation and extra InvestingPro Suggestions, together with insights on earnings revisions and the corporate’s valuation multiples, go to https://www.investing.com/professional/MBGAF. There are over 13 extra suggestions out there on InvestingPro, which may additional inform funding choices. To entry these insights, use the coupon code PRONEWS24 for a further 10% off a yearly or biyearly Professional and Professional+ subscription.
Full transcript – Daimler Ag OTC (MBGAF) This fall 2023:
Operator: Welcome to the Annual Outcomes Press Convention Name 2023 of Mercedes-Benz. At our prospects’ request, this convention can be recorded. The replay of the convention name can even be out there as an on-demand audio webcast within the Investor Relations part of the Mercedes-Benz web site. The brief introduction can be straight adopted by a Q&A session. [Operator Instructions]. I wish to remind you that, this phone convention is ruled by the Protected Harbor wording that you just discover in our revealed outcomes paperwork. Please notice that our shows include forward-looking statements that mirror administration’s present views with respect to future occasions. Such statements are topic to many dangers and uncertainties. If the assumptions underlying any of those statements show incorrect, then precise outcomes could also be materially completely different from these expressed or implied by such statements. Ahead-looking statements communicate solely to the date on which they’re made. Could I now hand over to Steffen Hoffmann, Head of Mercedes-Benz, Investor Relations and Treasury? Thanks very a lot.
Steffen Hoffmann: Good morning, everybody. On behalf of Mercedes-Benz, I wish to welcome you on board the phone and the Web to our Annual Outcomes Convention Name 2023. I’m very completely happy to have with me as we speak, Ola Kallenius, our CEO, and Harald Wilhelm, our CFO. You most likely all joined our presentation proper earlier than, simply as a fast reminder, the respective capital market presentation with all ’23 figures, and the outlook for ’24 may be discovered on our IR web site. You could ask your questions now I’ll determine the questioner by identify. Nonetheless, please additionally introduce your self with the identify and the identify of the group that you just’re presenting, earlier than asking your query. A couple of sensible factors. Please ask the questions in English. And as a matter of equity, please attempt to restrict the variety of inquiries to a most of two. And earlier than we begin, as all the time, the operator will clarify the process.
Operator: [Operator Instructions].
Steffen Hoffmann: And we begin the Q&A. First query goes to Tim Rokossa from Deutsche Financial institution.
Tim Rokossa: Sure, thanks very a lot, gents. And good morning, Tim from Deutsche Financial institution. Very nicely achieved, to begin with within the share buyback program. Harald, you and I had been mentioned in regards to the construction for a few years now. What you simply return in your market capital is admittedly robust dedication, precisely the proper message. And secondly, you have been to questions please. Harald, a few of these issues within the numbers weren’t so nice. The Mercedes margin is now down a number of quarters in a row. There have been pretty excessive capitalization ratios. The total 12 months outlook means that it is down somewhat bit not less than over final 12 months on the midpoint Q1 beginning weaker. There are causes for that. However how assured are you that the 48 legitimate points certainly mounted in Q2? How do you plan to maintain costs secure and finally channel on the margin improvement? After which secondly, Ola, that is maybe for you. You already mentioned in regards to the slower than anticipated EV ramp. There’s all types of causes for that. Do you count on it to end in an extra softening of the regulation? We already discussing that within the U.S.? Do you additionally see occurring in Europe? And on condition that your investments now want to remain elevated for an extended time period? Would you additionally take into consideration partnering up with guys prefer it’s being mentioned within the European mass market? Thanks very a lot.
Harald Wilhelm: Sure, thanks, Tim. So let me get began with the primary query on the margin evolution. I feel we, after we talked in regards to the quarter 4 for the primary time, on the finish of the quarter sleeve, we stated we might count on our fourth quarter to be at about 10%. I feel that is what we delivered. Nonetheless, we additionally stated imply that the fourth quarter shouldn’t be a proxy for 2024. I feel with the steering you heard from me as we speak, of 10% to 12%. That is precisely what it says. If the fourth quarter could be a proxy, we would not not have guided 10% to 12%. How can we get there? You heard that we have now the ambition to maintain the pricing secure. The spine of our is clearly the park and the product substance was a whole lot of nice autos available in the market and others to come back. In order that helps it. And general our insurance policies, as you can too see within the gross sales steering, they’ll be undoubtedly I imply desire the worth over the amount. So, right here you — I’d say you see the response in that. So what else, third and fourth quarter final 12 months was impacted by fees on provide chain aspect. On inflation associated capability, changes, and so forth, we stated that I imply, they mainly refers back to the full 12 months 2023. So, now I imply with the uncooked mats turning and the effectivity efforts, Ola emphasised on the fabric costuming at giant, we wish to achieve tailwind on materials price in 2024. So, I feel all of it means helps the fourth quarter was a ten% shouldn’t be the proxy. Nonetheless, one level I alluded to, I’d say within the name earlier than it was in presentation earlier than is the primary quarter, the 48-volt, again to your query. It nonetheless lasts into the H1, I feel operationally it is enhancing, however it’s nonetheless impacting availability of autos. And another points within the first half, particularly I imply within the first quarter. And that is why we stated the primary quarter I imply ought to most likely under quarter 1 ’23, by way of gross sales unit, which by the best way was I feel, for one more 90,000 items. So that might recommend that the fourth quarter, I imply, could be a tough one. If we take a look at the ambitions we have now, if we take a look at the price phasing, I’d say the primary quarter most likely ought to are available on the decrease finish of the steering vary for the total 12 months, however nonetheless throughout the vary. And given a fairly low quantity that by way of gross sales, that is an indicator of change, I’d say. So undoubtedly, we wish to restore the margin, beginning with a Q1, however then clearly with greater volumes and the quarters to come back take it to the extent of the steering vary of 10% to 12%.
Ola Kallenius: So, good morning, Tim. With regard to policymaking, supporting or not supporting the EV ramp, it’s totally, very tough to make a prediction. You possibly can see that generally policymakers make abrupt choices. Germany casing level on a Friday afternoon, the federal government determined to chop the incentivization for electrical autos for the next Monday. Fairly unprecedented. So to have a agency prediction on what is going on to occur, there’s tough. I’d say this although, so far as Europe is worried, there’s a evaluate arising in 2026 that’s baked into the coverage determination of going CO2 Free in 2035. For an enormous system, like transport and mobility to show, and actually swap power supply. That may be a Herculean activity that could be a systemic activity and industrial activity. And plenty of issues have to fall into play for that to occur, not simply the product. That is the factor that I am most assured about. As a result of we’re placing our cash the place our mouth is, and we’re investing 10s of billions into very enticing electrical autos arising, not simply us, the business as a complete. We’re additionally investing into infrastructure. However what the shoppers usually are not going to just accept, is to restrict or reduce their comfort by way of mobility, and definitely not the place it is used for enterprise functions. So if the enabling elements can’t preserve step with the ambition, I am certain a rational dialogue would should be onerous to evaluate, are we progressing on the trajectory that we have to go on? Or are we not? At the very least so far as Mercedes is worried, we’re doing every thing we will to create enticing merchandise, but in addition to inform our prospects we received your again and investing in infrastructure and different issues, working with our provide base and so forth. So I discussed in my speech. However I wish to be cautious with predictions right here. As a result of it’s totally tough to know what the political panorama will seem like in a few years from now.
Tim Rokossa: Thanks very clear.
Steffen Hoffmann: Thanks, Tim. And we go to London, subsequent query goes to George Galliers from Goldman.
George Galliers: Thanks for taking my questions. I wish to begin with a query across the introduction of the MMA platform. Within the slide deck, Ola talked about that it’s going to redefine what prospects ought to count on from an entry level product from Mercedes, which if the case ought to hopefully present itself in greater worth factors. With this in thoughts, and clearly not withstanding the financial challenges round X EVs, what do you see because the implications for worth combine inside Mercedes, from the introduction of the MMA platform, and the section out of a few of as we speak’s entry luxurious merchandise? The second query I had was across the free money stream, which I feel takes on rather more significance in mild of yesterday’s announcement. Over the past 4 years, you have generated greater than 35 billion of business free money stream, so a run charge in extra of 8 billion each year. And clearly, the steering of this 12 months implies free money stream once more in extra of 8 billion. Clearly, the long run is unpredictable, and you do not have a crystal ball. So, do you assume 8 billion is an inexpensive type of a ground to imagine for money stream over the following 4 years? And therefore, ought to there be potential to generate one other 30 billion plus over that timeframe? Thanks.
Ola Kallenius: So George, I am going to begin with MMA. What we’re executing with the MMA platform is what we got down to do. And I feel it is actually three issues which might be occurring right here. On the one hand, we have now made a portfolio optimization determination. So we’re focusing our portfolio. As you already know, from seven fashions to 4 fashions, on this section, we have now chosen the 4 fashions that we imagine will carry out the perfect in from a worldwide market perspective. We’re considerably elevating the technological substance of our product in that section. So the client in comparison with the very enticing merchandise that they get as we speak, will get a lot extra. And we’ll have a considerate and buyer pleasant method in direction of the refinement of these merchandise throughout the section, to be sure that it’s a Mercedes expertise, by way of and thru. However what we’re not going to attempt to do is to utterly go away the section, as a result of then truly you are doing a C-class and you are not doing a CLA. So whereas this implies a migration or a nudging North contained in the section, we wish to keep within the section. And particularly as you possibly can see on the BEV improvement to date internationally, it has been small and medium that has been the expansion elements for BEVs. And this is able to be our play in within the entry aspect of the medium, if you’ll then have adopted by MB EA, which is simply you already know, a 12 months behind throughout the electrical GLC and the C class. You bought to maintain these product positions aside. So keep throughout the section, however nudge up in that section.
Harald Wilhelm: Sure, George on the on the money stream, I feel the share buyback was a capital allocation framework is an announcement of confidence and continued money technology, in any other case most likely would not have been would not have made sense to come back out with the framework and the coverage of continued share buybacks over time, however nicely, with out giving a assure on money technology shifting ahead. However let’s return to fundamentals what makes the money stream its margin, proper. So, I imply, you have got made fairly good indication for the margin in 2024. With the product portfolio now and to come back ’25 ’26, I feel we really feel superb to defend a marketer place with the substance of the product. I imply, on the pricing stage, I imply, we talked about shortly earlier than in Tim’s query, so undoubtedly all in all, with the price focus, we have now the target imply to guard margin shifting ahead. Second level on the money stream clearly is funding aspect of issues. The place we’re doing rather a lot on the funding aspect, however we have now a really, very clear view of the portfolio during which we’re investing we have now to take a position and I imply that quantity does not undergo the roof. We set ourselves caps, I reiterated the purpose on the funding adjustment over time, perhaps a bit longer within the second half of the last decade, however not going so the photo voltaic roof. And on the working capital aspect, I feel you possibly can see that there is good stage of self-discipline to handle working capital. In order that in essence working capital imply is not a drain on money stream an excessive amount of. Which means money conversion targets, I do see them in within the vary of 0.8 to 1, not solely I’d say for 2024, however shifting ahead. For the van aspect given the step up and the longer life cycle funding on the van at 0.6 to 0.8 without cost years imply to come back most likely mid ’26 ’27 till within the week, or I imply will hit the market, however then a fairly good potential to come back again to greater stage conversion ratios. And I feel that ought to body your ideas on the dimensions and the steadiness of money technology shifting ahead, which can then gasoline clearly, the share buyback potential after EV. However perhaps there are some alternatives additionally. Some may take into consideration M&A, that, not less than on my aspect, I am not an enormous fan of enormous scale M&A. However perhaps M&A additionally consists of not solely acquisitions, however to divestitures. And over time, meaning we may think about after the lockup interval to divest from the Daimler Truck stake. I stated after we may and did not say we do, however we may, clearly that might help the free money stream and take it even to a better stage on which than the brand new coverage would apply. So, I hope that solutions your views on future money flows.
George Galliers: Very useful. Thanks.
Steffen Hoffmann: Thanks, George. And we keep in London proceed with Daniel Roeska from Bernstein.
Daniel Roeska: Good morning, gents. I am going to return to the ICE and BEV query. Would you count on your market shares in combustion engine and electrical autos finally to method comparable ranges, type of independently of the BEV share available in the market, so type of isolating your self a bit from that development? And in case your market share than BEV could be decrease than an ICE? What conclusions ought to buyers take from that? After which secondly, what does it take to deliver a number of the product pleasure you have got round MBVA to the combustion engine aspect? If you consider combustion engine vehicles within the 2030s, will you want a brand new platform, or not less than to refresh on the ICE aspect, type of what do you have to do type of to deliver MBOS [ph] to a number of the design language you have got now over again to the combustion engine aspect? Thanks.
Ola Kallenius: Daniel, good morning. For those who take a look at the event of BEV market shares, as a proportion of the whole automobile market up till this level, it’s evident that the very best chair it is type of coming from under going up and never the opposite method round. Within the segments. A lot of which is pushed by policymaking in China and the dynamics of the Chinese language market, the place a whole lot of small into medium is the place the motion is. On giant, if we take our EQ and EQS proper now, truly, we have now a fairly good market share. It is simply that the market just isn’t that large but. And that many purchasers in that section, they view the S-Class and the sibling vehicles as type of the non-plus extremely that they wish to have and we do not thoughts. Now, if we take a look at the timing of our launches, we begin launching subsequent 12 months the CLA and it is 104 as I discussed earlier than. So over the approaching to finish about 24-30 months there can be a household of vehicles there that then turns into the entry level for Mercedes and adopted up by which might be in premium luxurious the largest section C class and GLC and we’ll launch these merchandise in 2026. So we come into by way of assembly the market and the market construction as you possibly can see it as we speak we come right into a full swing by the 12 months 2027. So we have now not made any plans for any synthetic market shares decrease or greater on ICE or BEV. We wish to exploit in a price over quantity method, as Harald talked about. The utmost potential for these merchandise. When it comes all the way down to the ICE siblings, I feel it is also key right here. And I attempted to painting that in my presentation simply earlier than, that in case you stroll right into a Mercedes showroom, you count on the Mercedes to be a Mercedes to be a Mercedes, and perhaps do not assume a lot about if it is BEV or an ICE. So the applied sciences that we’re growing now on MBOS, subsequent technology driving help methods subsequent technology infotainment, and I do not know you probably have pushed you probably have pushed the brand new weeks us and I do know I am ever so barely biased, however I have not discovered a automobile that has extra thrilling infotainment providing than that automobile. I do not assume our ICE prospects long run would settle for if that’s like, like, then when the following gen involves BEV story solely, and the E-class is, after all, a combustion based mostly automobile. So we will must cross breed between the 2 as we go alongside. Do we’d like an entire new structure as in ripping up the playbook and ranging from recent on the combustion aspect? No, I do not. And the explanation why I do not imagine that’s twofold. On the one hand, by way of EU 7, China 7 and the emissions legal guidelines in the USA, primarily California, we’re updating all of our related ICE powertrain mixtures for the 2027 timeframe. So it is virtually like we could have a complete new recent lineup in 2027 that may carry us nicely into the 2030s. And we’re additionally along with our accomplice growing a model new entry stage four-cylinder engine that can even about 9 months or so perhaps 12 months or so after the electrical automobile on MMA even be a really aggressive, good hybrid powertrain that’s actually model new, then beginning no matter ’26 and ahead. So we received the powertrain lineup, and we have now the infrastructure to proceed to provide. And our structure then on the bigger autos that we name inside the corporate MRA2, it is actually model new the E-class sits on that structure, we imagine that we will with the applied sciences that we’re growing, use that to underpin any and each replace that we would wish to do to these autos alongside the best way on that journey into the 2030s. And if we have to do extra on the optical aspect, on the proper time, we’ll accomplish that.
Daniel Roeska: So if you consider the upcoming C class on MBEA, a type of is the thesis that the MRA2 may help type of an analogous or type of equal combustion engine model, proper? As a result of the MVA C class is distinctive in its personal method.
Ola Kallenius: And that’s true, as is the combustion portion of the C class and the DLC which is definitely our greatest vendor. However keep tuned, Daniel, and you may see what we have now up our sleeve.
Daniel Roeska: All proper. Properly, thanks.
Steffen Hoffmann: Thanks, Daniel. And we proceed with Patrick Hummel from UBS.
Patrick Hummel: Sure, thanks. Good morning, gents. To start with, congratulations to your capital allocation coverage choices. I actually assume that is, that is benchmark for the business. My query pertains to an replace on the medium time period plan that you just had laid out on the economics of want CMD. And earlier than already, relating to the, you already know, funding price range, the mounted prices, et cetera. Appropriate me if I am incorrect, or in case you assume I can be incorrect, that the amount assumptions you took for core for the core section, core luxurious section look somewhat bit formidable from as we speak’s perspective for 2025 perspective. So, are you able to simply to begin with, give us an replace on how you consider, the three buckets entry core and prime finish with a medium time period view? Now that the fact has deviated most likely barely from the plans laid out again then? And what’s the conclusion of perhaps the core section being somewhat bit smaller than anticipated a few years again relating to CapEx, or investments general, together with R&D, and the mounted price aspect of the enterprise, in case you may simply replace us on these constructing blocks as a result of that each one feeds into the free money technology of the enterprise, after all. Thanks.
Ola Kallenius: Sure, thanks for that query, Patrick. Let me begin with type of the composition of the pyramid or the diamond that we confirmed. We type of ran up on the highest finish stage to the share somewhat bit faster than we thought. And also you’re proper that the core aspect didn’t develop as quick as talked about two years in the past. Though a few of that’s product and launch associated, as we have now mentioned, so, our two predominant merchandise, the GLC and the E class in that core section, nicely, one is in full launch now, so we’re in swap over, that is the E Class. And the opposite one was certainly, restricted within the second half and into this 12 months, as has been mentioned. So I feel that by way of the relative significance inside that segmentation, we’re taking a look at somewhat little bit of a comeback of core. After which we’ll, as described earlier than, with MMA rigorously managed the entry aspect. So I feel the composition of the pyramid or of the diamond is, is fairly strong. And we’re following what we had stated. However then you definately take a look at the macro atmosphere available in the market, and I feel you need to experience the market. And we have now in as disciplined a method as attainable, all the time tried to search out the proper equilibrium between pricing defending worth defending residual values for our prospects, in addition to quantity. And popping out of this restricted period there with the semiconductors and every thing. The macroeconomic and the market situations are completely different now than maybe some individuals had thought. So that you additionally must experience the macro market. And that’s the place we simply tried to regulate quantity to what the market helps. So perhaps in absolute numbers had been somewhat bit behind, however within the composition, I feel we’re doing moderately nicely.
Harald Wilhelm: And EBITDA guiding it on the prime finish was at 16%. We stated we wish to get there over time. And really we’re there 2022 2023. Does keep in mind as nicely, that imply the highest finish clearly has a number of of the perfect as nicely, that are growing a little bit of slower tempo in comparison with the expectation perhaps at that time, actually, on the cut-off date, in spring 2022. In your query, what’s imply for mounted prices and investments? Patrick? Whereas the mounted prices are the mounted price, we’d say virtually no, it doesn’t matter what occurs round, so we do not see that as a proportion of income. No, it is an absolute quantity we’re driving 12 months on 12 months down with a 16% down by 2023. I imply, you possibly can see that. So we’re not that far off, I’d say of the 20%, which we ambition for 2025. So on observe to ship that. And we’re not stopping that in 2025. Positively, we have now the ambition imply to maintain going with each effectivity attainable in each division. On the funding aspect, in comparison with what we stated on the cut-off date, 20% down in comparison with 2019 by the mid of the last decade. We added undoubtedly portfolio positions AMG, EA portfolio on MVA and MBOs. So I feel that’s working at a better stage. And also you see precisely in on the identical time, the rise of the perfect share does not, does not go perhaps precisely in step with the earlier predictions, if we persist with the investments on this aspect. They’re essential that we have now a really exact view of the portfolio what must be achieved. And that matches in your complete envelope. And I discussed earlier than in inroads query. However with the 20% of the money of the investments down, sitting extra within the second half of the last decade, as Ola stated earlier than, when we have to use tactical flexibility, I imply on the ICE aspect, however the perfect funding profile for us is fairly clear. And we see undoubtedly imply the potential for the investments I imply, to come back down over time. So confirmed, not for 2025 however for the second half of the last decade.
Patrick Hummel: Thanks, each.
Steffen Hoffmann: Thanks, Patrick. And subsequent gentleman in line is Jose Asumendi from J.P. Morgan.
Jose Asumendi: Thanks very a lot. Good morning and congratulations on the capital allocation program. Two questions please. Are you able to talk about with regard to your — to the steering on the auto margin for 2024? What are the planning assumptions within the Chinese language market relating to quantity and earnings contribution from the area? And second, Ola, are you able to discuss somewhat bit in regards to the plan to hit the CO2 emission targets in Europe? And might you perhaps remark across the share of debt that you just’re planning in 2024 and 2025? Thanks.
Ola Kallenius: Sure, thanks, Jose. So general, I imply, as we stated, earlier than, we take a prudent view on gross sales in 2024, provide constraints are nonetheless being there, particularly imply within the H1 and the Q1 as I emphasised within the first query, that has an impression however imply past that, we additionally take a prudent view given the macro atmosphere. And clearly I imply within the very heated greatest competitors in China, the place we take part, however not by all means. And subsequently I’d say all-in-all, for China was within the gross sales flat steering. China can also be quite flattish imply, in there equivalent to your apparent and perhaps a little bit of upside potential from the U.S. and perhaps flat or barely down and stay of the world. So I feel that’s how the gross sales steering consists. With regard to CO2 steering for Europe, you possibly can see the chart and the presentation. So the spine of it’s clearly the xEV share, we’ll proceed to construct the xEV share. We’re now altering sensible, so sensible use to take a seat inside Mercedes, clearly from a authorized entity perspective. Now that’s entered into the pot through the three way partnership that we fashioned some years in the past. So you have got a technique change there. As I described earlier than, we launched the CLA in 2025 and actually get the type of the majority of the autos in 2026 and 2027. So if I take a look at that mid flip run up of the xEV share that appears wholesome within the crossover 12 months 2025 and into 2026. I am certain we’ll look rigorously at that and it will likely be underpinned by xEV share, ought to we have now to make use of different choices above that? We’ll preserve an open thoughts. However it’s development of xEV shared that finally solves that situation.
Steffen Hoffmann: Thanks, Jose, and we proceed with Stephen Reitman from Societe Generale (OTC:). Stephen, are you able to hear us?
Stephen Reitman: I can hear you, sure. Thanks. I’ve three questions, please. You have highlighted logistics has been one of many headwinds you have had in 2023, which I feel is a seen typically throughout the business. However we’re not seeing logistics prices falling fairly dramatically, significantly in some transport. How do you see that by way of influencing your attain in 2024? Might you additionally remark in your first ideas now on AC mannequin? Now we have had right here a bit within the UK and half 12 months in Germany doing to transaction costs. And thirdly, you confirmed us clearly the sneak preview of the facelift of the EQS, which is clearly stated as rather more than a facelift is a really substantial refresh of the automobile styling of the automobile is that which is extra — which appears to recommend a extra conventional method on the entrance finish. Is {that a} — is that an possibility? Or is that the best way that each one the autos will look? And in addition may you give us some concept on timing of the client deliveries of that automobile? Thanks.
Ola Kallenius: Sure, Stephen to your first query by way of the headwinds, sure, I imply earlier years, logistic prices I imply undoubtedly a headwind in the middle of 2023. You possibly can see general logistic prices have been turning and got here the opposite method. And subsequent to the price per unit on the logistics, I imply, we’re clearly attempting as nicely, I imply, to problem and enhance the general demand aspect of the logistics aspect, or particularly, if you consider outbound. At this stage as we communicate, nonetheless, I imply, a number of the geopolitical constraints like Pink Sea could get fed, clearly, ships are going a bit for longer, longer means costlier. So briefly, perhaps a little bit of a headwind, however globally, we’re attempting to take alternatives additionally from — I imply on logistics, in 2024. On the Mannequin D and the profit on transaction pricing. Properly, within the meantime, numerous markets, which we switched, proper in sorting was Sweden, South Africa, Australia, Austria, and now 2023 clearly, UK and Germany. And if we glance into each of those markets, what we will observe is after we examine mainly the pricing, the discounting within the state of affairs earlier than in comparison with thereafter, there’s a internet pricing profit, that varies rather a lot within the particular person market. So I imply, subsequently, I imply, this isn’t very significant, to provide any quantity right here. However clearly, it helped the pricing efficiency, which once more, was considerably constructive in 2023, as you possibly can see within the margin bridge on vehicles. And by there’s exact same factor on the van aspect, which can also be for males supporting within the pricing. And for what’s but to come back, I imply, we do count on the identical factor. Clearly Inter-brand competitors in goes away, transparency. And all in all, we subsequently see that as a good help to the pricing technique. With regard to the mannequin 12 months replace on the EQS, not simply the star on the hood, and that extra conventional Mercedes like panel within the entrance, however the government seating, the brand new battery chemistry, a number of the different measures that we have now taken to enhance effectivity and accepted vary that can be out there available in the market as of June. Truly, we’re sneaking within the battery. We’re truly making the battery replace earlier than that. However as an entire package deal, it is out there available in the market in June. Beginning in Europe, clearly, after which you have got some transport instances. And if I take a look at the suggestions that we obtain from our prospects from the EQS, and the EQE world wide, it’s a number of the highest buyer satisfaction scores we have now anyplace truly, somewhat over a 12 months in the past, when JD (NASDAQ:) Energy did a research in China. Truly, we scored the very best of any model any automobile. So the people who drive these autos, they find it irresistible. A few of them wish to preserve extra sporty look and have the star built-in within the panel. And a few, we imagine will wish to have the extra conventional look. So it is possible for you to to get each. For those who sit within the again, you possibly can nonetheless order the common backseat. However this government seating is then additionally out there of June. I am 195 tall, I sit at the back of an EQS, I can sit there very comfortably.
Steffen Hoffmann: Thanks, Stephen. And we proceed with Horst Schneider from Financial institution of America.
Horst Schneider: Sure, good morning. Are you able to hear me?
Steffen Hoffmann: Loud and clear.
Horst Schneider: Okay, wonderful. First query once more on pricing. As a result of it appears to me that surprisingly, pricing has received stronger in This fall even versus Q3. So, Harald are you able to perhaps clarify what has pushed that and danger assumption for 2024 that you just intention costs to carry up? Are you able to present somewhat bit coloration by area by section as a result of I feel not every thing is up or secure, one thing can be down one thing can be as much as drivers? And that is mainly secure pricing means and worth over quantity means do you quite focus from right here, actually not any extra on market share so that you just usually ought to count on mainly market share losses, additionally past 2024. And the final one is on Ola. Concerning greatest worth coverage, we see within the mass market in the intervening time that mainly greatest costs get all the way down to stage, the place additionally the ICE costs are. I feel that’s not but the case within the premium marketplace for this your working assumption mainly, on pricing going ahead on greatest once you count on greatest costs to go all the way down to ICE stage additionally within the premium market, otherwise you count on it in any respect ever to occur? Thanks.
Harald Wilhelm: Sure, thanks, Horst. So, first one on pricing. No, I feel we have stated within the presentation earlier as we speak. Full 12 months pricing was wholesome was strong. I feel in earlier quarters, we gave some coloration on what’s the pricing in itself, I imply, within the bucket. I feel we attain a little bit of the bounds is I see what different persons are doing, I am completely happy to commend on a qualitative foundation. And meaning within the fourth quarter pricing, quarter over quarter 4 ’23 over quarter 4 ’22 was nonetheless constructive. However I’d not say that I imply, quarter 4, by way of pricing was sitting above 1 / 4 suite 2023. However full 12 months and 12 months over 12 months, even fourth quarter was very supportive, as you possibly can see within the margin bridge. Trying into 2024 could not we stated we have now the goal we had the ambition to maintain pricing secure, secure and clearly means flattish. Now do we expect we will get there? I imply, primary, as you already know, pricing consists of a number of components, low cost administration, base pricing and escalation. So we’ll work on all levers we’ll preserve flexibility, clearly on discounting, to remain aggressive available in the market, however to not the extent that we wish to purchase market that we wish to purchase share, as some others may do. That isn’t our coverage, once more, worth over quantity applies. We predict market share ought to be defended by product substance and never essentially by aggressive pricing measures and actions as most likely the latter one usually are not sustainable, whereas the merchandise of since is sustainable.
Horst Schneider: However Harald that signifies that you your steering additionally a spread included proper, so higher finish of the vary might be like flat and the decrease finish of the vary would imply detrimental pricing, is that appropriate?
Harald Wilhelm: Properly throughout the steering, you have got many constructing blocks. So, pricing is one clearly, I imply the fabric price is one, logistics we talked about earlier than. So many issues we take a look at. After which we take a choose to you as after which clearly we construct from there. I imply, the steering vary, and as I stated earlier than, it is 10 to 12, which implies This fall just isn’t the proxy for 2024. With regard to the with regard to the BEV pricing coverage going ahead, in case you take a look at these M&A, and MBEA automobile, and so forth going ahead, we expect to begin with, that we’re placing enticing and aggressive autos into the market. So after all, we wish to exploit that. For those who then take a look at what ought to be the premium on a like for like, from combustion to a BEV, and it’s true, and I discussed it’s my speech that the variable price of the like for like electrical automobile is greater than the than the ICE. So in these enterprise circumstances, we’re assuming a, a average worth differential the place I do not assume we will be too aggressive or too optimistic. However we do assume that we will have a worth differential going ahead. And from a complete price of possession perspective for the client, thoughts you, that for them over time, the price of power fueling up with electrical energy, I suppose to gasoline or diesel, and so forth and so forth. And relying on which market, you are in taxation, et cetera. You already know, a few of that comes again. So the whole price of possession differential could be a lot smaller, and in some circumstances, it could be the identical.
Horst Schneider: Okay, that is nice. Thanks.
Steffen Hoffmann: Thanks, Horst. And we proceed with Michael Raab from Kepler.
Michael Raab: Sure, hello. Mike Raab from Kepler Cheuvreux. If you simply stated that you just wish to preserve flexibility in your low cost administration, I assume the important thing query is, the place’s the tremendous line to stroll on the road of discrimination past which you are compromising your worth over quantity technique? I assume what I am out for is to what extent are you prepared to ratchet up reductions right here? After which secondly, relating to BEV pricing or the final aggressive framework for BEVs? Are you continue to completely happy together with your residual values? Or have you ever already seen impression on the EVs to date? Thanks.
Harald Wilhelm: Thanks, Mike. Simply on the second query for certain. After we take a look at the residuals and any publicity, and clearly, not solely us, however our exterior auditors, and that is being achieved at each quarterly shut at any cost, which might should be taken, what’s written within the books. And clearly, we have been going by way of the procedures even when the audit just isn’t finally accomplished. However I’ve no indication I imply, that might be a change to that. And there is no materials adjustment within the books and information for EVs within the 2023 numbers, which we revealed. On flex discounting, I feel it is, it is a bit tough to provide a common assertion, you have to take a look at, clearly, the person product segments, you have to take a look at the person markets and the timing of the merchandise I imply, available in the market, the life cycles. Clearly, you are taking a look at what’s the margin contribution of the person ones. And that is I feel, I imply tactical daily job, I imply the gross sales staff in shut cooperation, clearly, with a number of finance guys trying over the shoulder. And the top outcome, you see mainly then within the quarterly bridges, I imply, once more, the place we give I feel a whole lot of particulars by way of within the bucket quantity combine and pricing. However the three levers I feel, are vital to be seen in conjunction, product based mostly pricing, which goes to the product substance escalation updates, year-on-year and discounting and once more on discounting might be imply the flex software in a aggressive market atmosphere.
Michael Raab: All proper, thanks.
Steffen Hoffmann: Thanks, Michael. And we proceed with Mike Tyndall from HSBC.
Mike Tyndall: Good morning, gents. Thanks for taking my questions. Only a couple if I could. Simply fascinated with the slight change to technique by way of xEVs, versus earlier ambition. And simply in 2023, it felt as if there was a penalty out of your provider aspect, since you did not fairly obtain the extent of volumes that you just had been aiming for. So I am questioning to what diploma you have received a flexibility together with your suppliers. If it seems that their penetration is decrease than you beforehand thought, has that modified in any respect, such that maybe what occurred in ’23 will not occur once more? After which the second query is on capitalization. I simply surprise in case you can discuss somewhat bit what’s inside that. Curious to know whether or not or not MBOS is inside that? And does, whether it is, does the rising capitalization kind of suggests that you’re getting nearer to the purpose of claiming we’re able to go on that. Thanks.
Harald Wilhelm: Sure, thanks, Mike. So first level I imply, we’re not commenting on particular person contractual relations with the suppliers, that after we speak about provide chain associated fees, inflation associated and capability adjustment associated fees in 2023, a decrease EV adoption charge, I imply, place one way or the other a job in it. I feel that’s truthful to say. And I am fairly certain that applies not solely to us, however to different market members as nicely. Nonetheless, I imply, within the discussions, I feel I imply, can go so far as saying that one, we take at our finish, I imply a long run view by way of the provision relationship and that does not go for 12 months, that goes for the product lifecycle, that goes for a number of merchandise, that goes over many, a few years. And so we wish to have constructive relationship and dialogue with the suppliers. Which implies, if there are fees to be thought-about, we’re prepared to take action. If we really feel that goes past and different components are sneaked in will push again onerous and we’ll think about within the general relationship with suppliers with respective penalties, I imply over time. On the second query capitalization charge. Sure, went up within the fourth quarter, outcomes, a number of components. Sure, completely we’re approaching maturity in U.S. So, Ola stated earlier, nonetheless, not a stroll within the park and nonetheless a whole lot of issues which should be achieved. However as autos are on the road are being examined options are arising, I feel that’s encouraging progress. What else is in there? I imply, a whole lot of merchandise within the pipeline, MMA clearly, MBEA AMG EA. So numerous stuff. And one other newcomer to a different, I imply child on the town, on the capitalization is the electrical G class. Properly I imply, as per the IFRS guidelines, you do not have the selection, you need to capitalize. You probably have a product which is meant to generate worth, otherwise you earn greater than your price of capital and with all of these things, that is very a lot the case. So, on this respect, I’ve to say capitalization in 2023 and within the fourth quarter, has not been a operate of serving to the EBIT. It’s a operate of worth creation forward for the long run. And doubtless will keep at an elevated stage. And in addition in 2024 round that stage, as we headed in 2023.
Mike Tyndall: Acquired it. Thanks very a lot.
Steffen Hoffmann: Thanks, Mike. And we proceed with Henning, Henning Cosman from Barclays.
Henning Cosman: Sure, good morning. Thanks for taking the query. I’ve a barely longer one and the shorter one. The longer one is across the quantity dynamic. So that you’re guiding flat volumes, you stated you missed about 100,000 items final 12 months, I admire it isn’t all coming again instantly. You are trying extra for the second half. However in case you would take out the 100, it virtually implies you you are guiding down 50 to 100. The whole lot else equal. So I simply wished to grasp that, why you would not count on that to totally come again? After which associated to that, from an EBIT perspective, to not go over all the person once more, however I assume, you already know, in my estimate could also be lacking out a $1.5 on EBIT or so due to 100,000 items… [Technical difficulty]. For those who may simply touch upon the way you see the construction margin potential. Right here you stated 10% for this 12 months, would you then within the context of the continuing, but in addition say 10% to 12% just isn’t a proxy for going ahead? In order that’s the primary query.
Steffen Hoffmann: Henning, we’re about to lose, we’re about to lose us. So, you probably have any likelihood to get nearer to a window or so it will be useful. We virtually can’t hear you.
Henning Cosman: Is that higher now? Steffen, are you able to hear now?
Steffen Hoffmann: Sure.
Henning Cosman: Sure. Sorry about that. So the second a lot shorter one was simply on the dividend. Thanks for saying there’s upside potential given the buyback. Would you be ready to say it is truthful to imagine in absolute phrases, secure or rising dividend from right here, even when it will imply exceeding a 40% payout ratio?
Harald Wilhelm: Sure, so thanks for becoming a member of. Let me attempt to cowl within the a number of questions throughout the query primary. Properly, I do not assume you possibly can take the roughly 100,000 items which we misplaced, so to say in 2023, and once they land on prime in 2024, might be you can’t exhibit that the shoppers have been saying, okay, thanks. I wait one other eight or 9 or 12 months and by the best way, I do not know for a way lengthy I’ve to attend. And subsequently you nail them on prime in 2024. I feel that is not the best way it really works. So most likely you have to assume that the lion’s share of the 100,000 I imply you misplaced and one won’t recoup in 2024. And subsequently, I feel you heard after we stated I imply, we take a broader view on 2024. It is nonetheless constrained by provide within the first half. I feel every thing has been stated on this regard, I’d say, I am completely certain in your margin query. And the margin related clearly to the 100,000 100, roughly 100,000 items is a fairly substantial quantity, however I’ve steer clear of commenting how a lot of the principle that’s. On the EV margin, I’m not precisely certain, as I imply the road was minimize out a bit. However by way of the standard of the EV margin, what can we are saying at this juncture. I imply undoubtedly, it is sitting under the ICE. We additionally needed to take changes, it is began one way or the other in fall 2022, with some repositioning in China. We took some additional motion in 2023, to remain within the ballpark, to remain in — to remain aggressive. However we’re undoubtedly not going so far as different opponents by way of attempting to push the EV merchandise into the market by all means. So in different phrases, I’d say we outlined them within the line within the sand, the boundaries, which clearly match into the goals, the general monetary goals 12% to 14%, we stated for 2023, we made 12.4%. And that’s the identical now what we baked into for 2024. And perhaps I’m going so far as saying that the margin contribution of the EVs is constructive. And also you simply take into consideration contribution margin not EBIT margin, however contribution margin i.e. margin per unit. I can say that that is double digit. On the dv query, I am not making projections on the long run dividends as such. However as you possibly can see, with the dv proposal of 5 12 months or 30, the share buyback accretion provides DPS upside potential of roughly 2%, in case you examine to the 5 12 months or 20 at ISO internet revenue. And now finishing the remaining 2 billion in ’24, including the three billion till towards 2025. That ought to recommend I imply, an extra accretion potential on EPS and in addition on DPS assuming, in case you depart from the identical stage. Clearly I imply with a steering, you have to consider most likely a little bit of a decrease EPS and DPS as nicely. However subsequently, the share buyback undoubtedly serves as a stabilizing and upside potential for EPS and DPS.
Henning Cosman: Thanks, Harald. Sorry for dangerous line.
Steffen Hoffmann: Thanks, Henning. And the final query goes to Harald Hendrikse from Citigroup.
Harald Hendrikse: Thanks a lot for taking my query. Once more, congratulations, I am very completely happy you have achieved this on the money aspect, not least as a result of it clearly competes with another investments and stuff that we have checked out traditionally. Only one actually fast query. I am going to preserve it to only one. Are you able to simply discuss somewhat bit extra about China, Porsche has been very vocal about prime finish in China, yourselves? You already know, the Chinese language market clearly has been tougher. So can we speak about you already know, general China demand the way you see that growing? It looks like, German market share is certainly beneath stress now, even together with your manufacturers. After which secondly, given tariffs and stuff could come up once more this 12 months. What are we fascinated with China as a manufacturing base, if we do have spare capability? I feel we’re trying to make EVs for the worldwide market from China. Is that viable? And the way are you taking a look at by way of future investments and stuff? Thanks very a lot.
Ola Kallenius: Sure, thanks, Harald. As you possibly can see, in 2023, we had a strong 12 months in China, despite the truth that the Chinese language market didn’t develop the dynamics that many individuals had hoped, publish the pandemic. And we take a prudent view, Harald alluded to it earlier than for 2024. So we’re not going to place over optimism into China. However we’re launching now the brand new E class, which is, one of many core fashions, and it is industrialized in China. So that may as soon as we’re ramped that quantity, I’d say newest by Q2 will give us some momentum. So China as is the case with its financial system. It is extra going sideways than it is going upwards, there’s excessive stage of aggressive depth within the EV market, a lot of which is, after all under the segments that had been typically represented in. And we’re attempt to keep as disciplined as attainable to not be sucked into to these dynamics, after which may flex with volumes as a substitute. With regard to potential protectionism and the dialogue that is occurring between the EU and China, I feel we have now acknowledged our place very, very clearly. Any transfer by the EU or different celebration to race protectionism is a price destruction transfer, particularly for an financial area, like Europe and Germany that could be a large exporter. So we’re collaborating in that research, and making our opinion very, very clear.
Harald Hendrikse: Okay, thanks very a lot. Thanks.
Steffen Hoffmann: Thanks, Harald. And with that, women and gents, thanks very a lot to your query for being with us as we speak. Thanks rather a lot to Ola and Harald for answering the questions. As all the time, IR stays at your disposal. And earlier than I shut as we speak’s name, I might prefer to remind you of our upcoming Mercedes Benz ESG Convention, which can happen nearly on March 20. There we’ll present you an replace on the progress and the achievements within the related fields of E, S, and G. Keep tuned. And now to all of you have got a terrific morning, nice afternoon or nice night. Thanks and goodbye.
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