Mercedes (A2/A): 1Q24 Results Review
Neutral for spreads. Much like VW and STLA this had been flagged as a trough quarter. In line with peers FY24 guidance is maintained, anchoring spreads, but risks remain.
• Revenue beat by 1%, but adj. EBITDA missed by 3%. Car margins disappointed on volume declines, with high end models impacted by transitions. Supply chains are also blamed.
• FCF was pretty much in line with low capex cancelled out by inventory build (not many analyst estimates available however).
• Capital return remains aggressive versus peers, with a new €3bn buyback announced (€7bn over 12 months through 1Q25). Some will question the wisdom with R&D spend in EV still required. It is however covered by €8.4bn in expected FCF.
• Outlook for 2024 confirmed, with analyst expectations slightly below guidance.