The car manufacturer Mercedes-Benz achieved an unexpectedly high free cash flow in its industrial business last year.
Above all, the Stuttgart-based company managed to reduce inventories in the car and delivery van business and thus free up funds, as they surprisingly announced on Thursday evening. The cash inflow exceeded the DAX group’s own forecast and also average market estimates. The stock rose because investors were confident about the dividend payment.
The Mercedes-Benz share price temporarily rose by 2.57 percent to 64.70 euros on XETRA on Friday. The share certificate thus continued its recovery from the past few days. In June, the note was still trading at a good 76 euros at its annual high. After that, things gradually went downhill due to investor concerns about the general economic situation as well as business in China and electric cars.
Analyst Daniel Roeska from the analysis firm Bernstein Research attested that the group had a cash inflow that was well above market expectations. However, he estimates that the rest of the business figures are more likely to be at the level of expectations. A stock trader said the development of cash inflows underpinned the group’s dividend payment.
According to preliminary calculations, free cash flow increased to 11.3 billion euros last year. The development was due, among other things, to lower working capital, the company said. Industry experts would have expected 9.9 billion euros. In its own forecast, Mercedes-Benz had only forecast a slight increase compared to the previous year’s figure of 8.1 billion euros.
Free cash flow is primarily influenced by how much money a company earns in day-to-day operations and how much it spends on investments. But the parts in stock as well as unsold and half-finished cars also play an important role because they tie up capital. Free cash flow is seen by investors as an indicator of a company’s current financial strength, which can influence, among other things, the dividend.
Mercedes did not provide specific information on other earnings and forecast indicators such as earnings before interest and taxes and the operating profit margins of the individual divisions. However, it was said that on a preliminary basis these were “not subject to ad hoc disclosure” – meaning: the values did not deviate significantly from the expectations of the market and the company.
STUTTGART (dpa-AFX)
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