Mercedes-Benz Group: stock in reverse after warning

(CercleFinance.com) - Mercedes-Benz Group fell heavily on the stockmarket on Friday after it revised its annual targets downwards, citing deteriorating economic conditions, particularly in China.


The premium carmaker said it was now expecting an adjusted EBIT margin of only 7.5% to 8.5% for its car division this year, compared with a previous range of 10% to 11%.

Several analysts pointed out that this new forecast implied a margin of only 6% for the second half of the year, compared with the consensus figure of 10.9%.

In the wake of this statement, Mercedes-Benz Group shares plunged by almost 7% on Friday morning, posting the biggest drop on the pan-European STOXX Europe 600 index.

Shares in its luxury car rivals Porsche and Volvo lost more than 4% in the wake of this warning. BMW, which had already issued a profit warning ten days ago, lost around 3%.

Europe's automotive index, the STOXX Europe 600 Automobiles & Parts, also dropped over 3% following these announcements, which only confirm the worrying context surrounding the sector in recent weeks.

If some investors were expecting a profit warning from Mercedes, we consider it a surprise, especially in view of its magnitude and the absence of cautious comments that may have preceded it, teams at RBC reacted.

Regarding BMW's warning, it was explained by simple supply problems, the Canadian broker said.

Analysts at Oddo BHF, who also consider that the downward revision of targets may come as a surprise, believe that the situation in China is turning into a "nightmare".


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