BERLIN (Reuters) -Mercedes-Benz lifted its outlook on Friday for the annual adjusted return on sales of its vans division to 11%-13% from 9-11% previously, and said it expected to hit the higher end of its 12%-14% forecast for returns in the cars division.
Overall, global growth was likely to remain subdued, but inflation was gradually declining, energy prices were expected to be less volatile and demand was good in the U.S. and China, the carmaker said.
In Europe, demand was sluggish, it added, with the order book only supporting sales in the coming months.
Mercedes-Benz reported group earnings of 5.5 billion euros ($6.06 billion) and adjusted return on sales for its cars division of 14.8% in the first quarter, above expectations but below last year’s 16.4% margin.
The vans division saw an adjusted returns margin of 15.6%, up from last year’s 12.6%, boosted by improved deliveries and pricing.
Sales were up 3% across the group to nearly 503,000 units, as supply chain bottlenecks eased further.
The carmaker had warned in February that it expected lower earnings this year, even with sales remaining stable, as high costs and inflationary pressure were likely to weigh on margins.
Still, sales in the very upper end of its product range, which helped it weather increasing costs last year, carried it through the first quarter of 2023 as well, with top-end sales up 18% and sales at its high performance AMG brand up 44%.
“Our focus on top-end cars and premium vans has made Mercedes-Benz more weatherproof, allowing us to accelerate our digital and electric transformation – even in a period of economic uncertainty,” Chief Financial Officer Harald Wilhelm said in a statement.
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(Reporting by Victoria Waldersee, Editing by Rachel More and Uttaresh Venkateshwaran)