Mercedes-Benz cuts forecasts due to weakness in China
Mercedes-Benz shares fell more than 7% after announcing a cut in its profit forecast due to economic weakness in China. The company adjusted its adjusted return on sales forecast for its auto division to between 7.5% and 8.5%, down from the previous range of 10%-11%. The slowdown in consumption and problems in the Chinese real estate sector have reduced demand for luxury cars, affecting the automaker's sales. Mercedes also warned that pricing pressure will continue during the second half of the year, which could further deteriorate its results. The forecast cut is in line with the trend seen at other manufacturers such as BMW and Volkswagen, which have also seen weaker demand. Although some adjustment was expected, the magnitude of the warning has been larger than expected, affecting sentiment towards the brand.
Since April 2024, Mercedes-Benz shares have fallen 29.85%. However, in the last nine days it has recovered 8.73%. Balance sheets for the last three years show a weakening in its profits since 2021. In addition, increasing competition from Chinese manufacturers, which are expanding into Europe, has increased the pressure on German manufacturers. Chinese consumers are opting for local brands that offer more tailored products and better value for money. In terms of technical analysis, Mercedes-Benz shares are in a rebound on key support dating back to February 2021. If the upcoming financial results do not meet expectations, there is a risk that this support around €50.63 could be broken, which could exacerbate the company's downtrend.
Ion Jauregui –ActivTrades Analyst
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Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
Since April 2024, Mercedes-Benz shares have fallen 29.85%. However, in the last nine days it has recovered 8.73%. Balance sheets for the last three years show a weakening in its profits since 2021. In addition, increasing competition from Chinese manufacturers, which are expanding into Europe, has increased the pressure on German manufacturers. Chinese consumers are opting for local brands that offer more tailored products and better value for money. In terms of technical analysis, Mercedes-Benz shares are in a rebound on key support dating back to February 2021. If the upcoming financial results do not meet expectations, there is a risk that this support around €50.63 could be broken, which could exacerbate the company's downtrend.
Ion Jauregui –ActivTrades Analyst
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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