Mercedes reports higher second-quarter profit, but flags China woes for car sales
Mercedes-Benz Second-Quarter Financial Performance and Market Challenges
By Rachel More
Second-Quarter Earnings Overview
BERLIN, July 28 (Reuters) - German premium carmaker Mercedes-Benz reported a 22% rise in second-quarter operating profit on Tuesday, helped by intensified cost-cutting measures, but warned of weakness in its core cars business as it continues to struggle in China.
Group earnings before interest and tax (EBIT) came in at €1.5 billion ($1.7 billion), slightly below a Visible Alpha consensus of €1.6 billion.
Future Outlook and Revenue Expectations
Mercedes now expects both sales of cars and group revenue to come in slightly below the prior-year level in 2026, having previously forecast a stagnation.
Key Drivers of Financial Results
Financial Services and Vans Units
The group's result was supported by strong earnings at its financial services and vans units. It also benefited from a €131 million gain linked to the planned sale of its leasing subsidiary Athlon.
Cost-Cutting Initiatives
"Despite a demanding market environment, we remained on track in the second quarter while continuing to advance our product launch programme," CEO Ola Kaellenius said, vowing further cost-cutting measures in the second half of the year.
Industry-Wide Challenges
Like peers Volkswagen and BMW, Mercedes is working to improve its cost structure as tariff costs mount, Chinese competition heats up and German production sites come under pressure.
Specific Cost Measures
Mercedes said cost measures supported second-quarter earnings, with cuts to administrative and R&D spending.
Building on a 25% reduction in fixed costs since 2019, the company said it began intensifying global productivity measures in June, with a particular focus on its German locations.
Additional Information
($1 = 0.8795 euros)
(Reporting by Rachel More; Editing by Linda Pasquini and Varun H K)
