Research Update: Mercedes Outlook Revised To Positive As Stronger Margins Increase Headroom For Looming Industry Slowdown; 'A-' Affirmed

Global premium carmaker Mercedes-Benz Group AG (Mercedes) continues to extend its track record of strong profitability and cash flow, heading for an adjusted EBITDA margin of well above 15% and adjusted free operating cash flow (FOCF) of more than €8 billion this year. We anticipate that the company's focus on trimming costs and optimizing its model portfolio could help contain the financial effects of looming uncertainties, such as a likely slowdown in car demand, steep input cost inflation, and potential production stoppages from component or energy supply shortages, or trade union action, over 2023-2024. We therefore revised our outlook on Mercedes to positive from stable and affirmed our 'A-/A-2' long- and short-term issuer credit and issue ratings on the group

...- Global premium carmaker Mercedes-Benz Group AG (Mercedes) continues to extend its track record of strong profitability and cash flow, heading for an adjusted EBITDA margin of well above 15% and adjusted free operating cash flow (FOCF) of more than 8 billion this year. - We anticipate that the company's focus on trimming costs and optimizing its model portfolio could help contain the financial effects of looming uncertainties, such as a likely slowdown in car demand, steep input cost inflation, and potential production stoppages from component or energy supply shortages, or trade union action, over 2023-2024. - We therefore revised our outlook on Mercedes to positive from stable and affirmed our 'A-/A-2' long- and short-term issuer credit and issue ratings on the group and its debt. - The positive outlook indicates the possibility of an upgrade in the next 12¡24 months if Mercedes sustains an adjusted EBITDA margin above 13% and adjusted FOCF to sales above 4% amid a challenging macroeconomic...

Research Update