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Mercedes-Benz Group AG rose after reporting better-than-expected cash flow last year, as the luxury carmaker focuses on its most profitable models.
Industrial cash flow stood at €11.3 billion ($12.3 billion), the company said in preliminary figures late Thursday. That’s well ahead of last year’s levels and above the €9.54 billion average of analysts’ estimates compiled by Bloomberg.
Mercedes shares rose 3.3% in early trading, their biggest intraday gain since Dec. 14, helping par last year’s losses of just over 10%.
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Automakers have benefited from higher orders as banks helped ease global economic headwinds after interest rates rose. Also, premium-car buyers like Mercedes have faced less inflation, which has hit volume producers in the mass market.
share buyback
Investors will keep an eye on the strong dividend and potential new share buybacks following Mercedes’ release, Bernstein analyst Daniel Roska said in a note.
“Mercedes-Benz should show its confidence by continuing its dividend and adding a commitment to new share buybacks,” Rosca said.
Stifel analyst Daniel Schwarz sees the higher cash flow as a guarantee that Mercedes will continue its €4 billion buyback program started in February last year.
“There’s nothing else to do with that pile of cash,” he said.
During the first half of last year, a well-filled order book allowed the manufacturer to command higher prices as semiconductor shortages still limited production. But in October, Mercedes said margins had begun to decline due to higher costs and lower average car prices.
Mercedes did not provide details of results other than cash flow. The Stuttgart-based company is scheduled to report full-year earnings on Feb. 22.
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