Mercedes-Benz Cars & Vans announced that it is expecting adjusted earnings before interest and taxes (EBIT) of 14 billion euros ($15.94 billion) in 2021.
(Photo : THOMAS KIENZLE/AFP via Getty Images)
Mercedes-Benz Cars & Vans delivered some great news to its investors, with the luxury carmaker expecting an adjusted earnings before interest and taxes (EBIT) of 14 billion euros ($15.94 billion) in the year 2021, as per International Business Times. Mercedes-Benz released the preliminary results on Friday, February 11, with its sales boosted by the large demand for its higher value electric vehicles.
The German automaker predicted an adjusted return on sales of 12.7 percent in the full year, beating its own guidance for 2021 of 10-12 percent. The jump in EV sales helped Mercedes-Benz generate strong profits in 2021 despite the German marque encountering supply chain troubles throughout the year.
Mercedes-Benz released data last month, showing sales of its battery-electric vehicles grew by over 90 percent in 2021, even as total sales of its entire lineup dropped by 5 percent. The German automaker adapted in the face of computer chip shortages, prioritizing higher-value cars to boost its profits.
Mercedes-Benz CEO delighted with strong 2021 performance
Mercedes-Benz CEO Ola Kaellenius issued a statement regarding his company's strong performance last year, saying, "Our good results are the outcome of highly sought-after products and the focus on profitable growth and cost discipline."
Kaellenius has repeatedly said that Mercedes-Benz aimed to boost profitability rather than focusing exclusively on unit sales, according to the Daily Sabah. Kaellenius has instilled this mindset with Mercedes-Benz striving to raise its valuation on the stock market after its split with Daimler Truck in December of last year.
Mercedes-Benz finished 2021 strong with the company announcing on Friday that it saw an adjusted return on sales of 15 percent during the fourth quarter of last year. During that period, the firm's profitability was boosted by "solid net pricing, good product mix, and favorable used car performance." The company also expects the deconsolidation from Daimler Truck to increase its EBIT by 9 to 10 billion euros.
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Supply chain issues will continue to affect Mercedes in 2022
However, it was not all good news for Mercedes-Benz, with Chief Financial Officer Harald Wilhelm warning on Friday that semiconductor shortages and raw material prices would continue to prevent the company from meeting strong market demand for its vehicles this year, as reported by Reuters.
During a conference call, Wilhelm told analysts following the 2021 preliminary results that chip capacity is coming back up, and the shortage will ease in the second half of 2022. He added that a "good part" of raw material costs are already locked in, but it is a matter of fact that there will be a material headwind this year.
Wilhelm explained that Mercedes-Benz would need the volume lever to mitigate and fight this particular problem again. He said, "We will try and see what can still be done on top of 2021 in terms of the pricing, but the pricing itself will not be enough."
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