Mercedes-Benz Group AG (OTCMKTS: DMLRY) raised its outlook for the rest of the year during its earnings release on July 27. The company showed revenues of €36.4 billion (~$36.93 billion), an increase of 6.7% year on year (YoY). Similarly, the group beat on earnings per share (EPS), posting a total of €2.91 (~$2.95).
Strong demand for cars in Europe, the U.S., and China with an increasing backlog led to a strong performance, according to Chairman Ola Källenius who joined CNBC’s Squawk Box Europe to discuss the company’s performance.
“We’re coming off of a very strong quarter, with revenues up 8%, then profit up 20%, so it has been very solid <…> We have the most attractive product portfolio in company history and very strong demand, being held back by semi-conductor shortages.”
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Asked about the chip-shortage evolution over time, Källenius added:
“We have been working with our suppliers last year and this year to step by step alleviate this issue, but talking to the major chip makers, it looks like we’ll definitely have it throughout this year and even into next year. So it has to be a step-by-step process.”
Investments in the future
Supply constraints and slowing consumer demand could be troubling for the auto sector; however, pent-up demand may also be a factor for car purchases. Covid lockdowns, and now supply chain issues are pressuring sales, but Mercedes’s recent investment in the production of an electric truck, the eEconic, could be pointing to an electric vehicle (EV) future for the German auto behemoth.
Equally important, the strong quarterly results, high demand, and over €1.4 billion (~$1.42 billion) cash on hand could make Mercedes stock a worthwhile buy, hoping that the stock may turnaround if supply chain issues get resolved.
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