Mercedes-Benz posted better-than-expected preliminary earnings in the first quarter as the automaker’s push further upmarket helped it overcome higher raw-material costs.
Mercedes delivered an adjusted return on sales of 14.8 percent on healthy net pricing and robust demand for its vans and luxury cars, the automaker said in a statement on Thursday.
First-quarter group earnings before interest and taxes rose to 5.5 billion euros and adjusted return and industrial free cash flow was at 2.2 billion euros.
“The company beat across key segments,” Bernstein analysts led by Daniel Roeska said in a note. “Mercedes is fast approaching a position to revise guidance upward later in the year.”
The automaker is trying to sell more top-end models like its S-Class sedan to bolster profits and help fund a costly shift to electric vehicles.
Economic uncertainty and inflation have compounded the challenges for an industry dealing with persistent supply issues and profitability concerns sparked by Tesla’s recent price cuts.
“In a challenging market environment, we have once again demonstrated resilience,” Chief Financial Officer Harald Wilhelm said in the statement.
“Strong pricing significantly outweighed headwinds from material costs and led to another quarter of solid financial results.”
The strategy took a knock late last year when Mercedes discounted prices for its flagship electric vehicles in China amid intensifying competition in the biggest auto market.
Still, the automaker has successfully increased sales of high-margin vehicles.
Adjusted return on sales of the vans division rose to 15.6 percent due to improved net pricing and higher sales, the company added.
Mercedes earlier this month reported a 3 percent increase in global sales, with Europe posting the strongest growth at 8 percent, boosted by EVs and premium cars.
Mercedes is guiding for its automaking margin to be 12 percent to 14 percent this year, down from 14.6 percent in 2022.
The automaker plans to publish full results on April 28.
Reuters contributed to this report