Mercedes-Benz Shares Under Pressure Amid Profit Decline and Cautious Outlook
Shares Fall for Fourth Consecutive Session
Mercedes-Benz Group’s stock experienced its fourth straight day of decline on Thursday, slipping by 2.5% to close at €50.10. The drop came after a strong start to the week, when shares briefly climbed to a July high. However, Monday marked a bearish reversal, as the price fell below the long-term 200-day moving average. Midweek, following the release of the company’s second-quarter earnings report, the stock also dropped below its 100-day moving average. By Thursday’s close, the price had slid below both the 50-day moving average and last year’s low.
For a potential recovery, shares would first need to rise above the downward trendline from April, currently aligned with the previous year’s low at €50.75. If they manage to climb past the 50-day moving average (now at €51.25), there could be room for a rebound toward the 100-day line at €52.62. Further gains may encounter resistance near the twin peaks recorded on June 11 and May 29 at €53.00 and €53.91, respectively. A successful move above the 200-day moving average (€54.35) could open the way to the July high of €56.84 and the lower boundary of the gap formed on March 27.
Second-Quarter Earnings Take a Hit
On Wednesday, Mercedes-Benz released its Q2 financial results, revealing a significant drop in profits due to U.S. tariffs and intensified competition in the Chinese market. While the decline was anticipated, the numbers turned out to be better than what analysts had feared. Market attention also focused heavily on the updated outlook, especially after the recent trade agreement between the U.S. and the EU.
The automaker reported an adjusted operating profit of €1.99 billion for the second quarter—a steep 51% drop compared to the same period last year. However, this was well above analysts’ expectations of €1.59 billion. The passenger car division contributed €1.23 billion in adjusted EBIT (forecast: €971 million), while the vans segment delivered €441 million (forecast: €424 million). The operating margin in the car division stood at 5.1%. Meanwhile, total revenue dropped by 9.8% to €33.2 billion, and net profit fell to €957 million.
Multiple Pressures Weigh on Performance
Beyond one-off factors such as restructuring expenses related to ongoing staff reductions, the company’s performance was particularly hit by challenges in the U.S. and Chinese markets—two key regions where demand has softened. Even though a recent trade agreement will reduce U.S. tariffs to 15%, Mercedes-Benz is struggling to absorb additional costs without passing them on to customers.
Given these headwinds, the company has issued a cautious forecast for the full year. Management now expects an adjusted return on sales in the automotive segment between 4% and 6%, which is broadly in line with the earlier consensus of 5.13%. However, this is a downgrade from the pre-tariff guidance of 6% to 8%.
Strategic Adjustments in Response to Global Uncertainty
CEO Ola Källenius emphasized that the company is actively responding to geopolitical uncertainties by adopting a globally diversified production strategy and implementing structural reforms. Although sales volumes in the second half of the year are expected to remain consistent with the first half, the company anticipates a modest recovery in the van segment. Nevertheless, rising competition in the Chinese market continues to be a significant drag on performance.
As Mercedes-Benz navigates a complex global landscape marked by trade disputes and shifting market dynamics, investors and analysts alike will be closely watching the effectiveness of its strategic responses in the months ahead.
