By Rachel More
BERLIN, April 29 (Reuters) - Mercedes-Benz reported a sharp drop in first-quarter operating profit but beat forecasts on Wednesday, as the German premium carmaker battles to shore up dwindling margins and revive weak demand in key markets like China.
The automaker reported earnings before interest and tax (EBIT) of 1.9 billion euros ($2.22 billion), down 17%, but higher than the average analyst estimate of 1.6 billion euros, according to a poll conducted by Visible Alpha.
Steep tariffs,
China woes and a rocky transition to electric vehicles have weighed heavily on German carmakers like Mercedes, whose CEO Ola Kaellenius has turned to sweeping redundancies and cost cuts to stem losses while rolling out a cascade of new models.
The Stuttgart-based company posted first-quarter revenue of 31.6 billion euros, missing analyst estimates for 31.8 billion euros.
The adjusted return on sales for Mercedes' core cars division was 4.1%, within a full-year target of between 3% and 5%, but down from 7.3% in the same quarter last year.
Chief Financial Officer Harald Wilhelm said the company was "on track" to reach its guidance of 2026 group EBIT "significantly above" last year's 5.8-billion-euro result.
"Strong demand for our new products and healthy order books position us well for improved momentum in the second half of the year," Wilhelm said.
Mercedes is launching 40 new models between 2025 and 2027, including the all-electric CLA sedan in its entry-level segment and a revamped S-class range to defend its status as a top luxury brand in China.
The finance chief said the company would also continue to pursue tight cost control, as it targets a cautious return to double-digit margins with a mid-term target of 8 to 10%.
($1 = 0.8543 euros)
(Reporting by Rachel More; Editing by Kirsti Knolle and Harikrishnan Nair)
