Mercedes-Benz Stock: Profits Plunge, Sparking Major Restructuring Plans

Mercedes-Benz experienced a significant stock decline on Thursday, with shares dropping to €58.87, following the release of disappointing 2024 financial results. The luxury automaker reported a substantial decrease in performance, with revenue falling 4% to €145.6 billion and group profits plummeting 28% to €10.4 billion. The company's challenging year was primarily attributed to weakening Chinese market performance, resulting in a sharp decline in operating margins from 12.6% to 8.1% in the passenger car segment. In response to these setbacks, Mercedes-Benz announced a reduced dividend of €4.35 per share, down from the previous year's €5.30, while simultaneously introducing a €5 billion share buyback program to boost investor confidence.

Strategic Transformation Initiative

To counter these challenges, Mercedes-Benz unveiled an extensive restructuring strategy aimed at achieving double-digit operating margins by 2027. The comprehensive plan includes reducing global production capacity from 2.5 million to approximately 2.2 million vehicles and implementing a 10% cut in production costs. The company plans to double its manufacturing presence in European low-cost countries from 15% to 30%, with a particular focus on expanding operations in Hungary. Despite these cost-cutting measures, Mercedes-Benz remains committed to advancing its technological capabilities and expanding its luxury vehicle lineup, including the development of its proprietary MB.OS operating system.