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Mercedes reports profit boost, warns of 'exceptional degree of uncertainty' in 2023

Mercedes-Benz Group (MGB.DE) on Friday reported profits and revenue that grew by 28% and 12%, respectively, in 2022, but warned economic concerns could weigh on this year's results.

The German automaker reported full year revenue of 150 billion euros, or around $160 billion, up 12% compared to 2021, and EBIT (earnings before interest and taxes) of 20.5 billion euros, or around $21.8 billion, a 28% jump compared to 2021 as the automaker prioritized its "top-end," higher-margin vehicles and services.

"We have redesigned Mercedes-Benz to be a more profitable company thanks to our focus on desirable products and disciplined margin and cost management," Mercedes-Benz CEO Ola Källenius said in a statement.

"We cannot control macro or world events, but 2022 is a case in point that we are moving in the right direction."

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Mercedes shares trading in Germany gained around 3% on Friday.

A big part of Mercedes' global strategy is to focus on its top-end, or higher-priced vehicles and also electrified vehicles, including hybrid and fully-electric cars. For 2022, top-end vehicle sales — which includes its G-class, Maybach, and AMG vehicles — rose 8% compared to 2021, and electrified vehicles jumped 23%.

Mercedes also reported adjusted return on sales, or margin, of 14.6% for its cars division, near the top end of its forecast of 13-15%.

However, the automaker sees that adjusted return on sales falling into the 12-14% range in 2023, despite unit sales that are expected to stay constant.

Mercedes also sees 2023 revenue staying at the prior-year level, with EBIT actually dipping “slightly below” 2022’s results.

Mercedes-Benz S-Class passenger car are lined up at the

"The global economic conditions continue to be characterized by an exceptional degree of uncertainty," Mercedes said in its earnings presentation.

The company highlighted geopolitical events, including the war in Ukraine and further Covid-19 infections in China, that could affect sales.

"Other availability bottlenecks, in particular those affecting semiconductors, remain a large source of uncertainty… [and] persistently high or repeatedly rising inflation rates, sharply rising interest rates and an even more pronounced slowdown in economic growth may also have an impact on the risks and opportunities described in the individual categories," the company said.

Källenius did strike an optimistic tone with regards to supply chains, however.

"If we look at 2023, we think that we will see a gradual easing of the supply chain constraints. We’re not out of the woods completely yet but we expect that to get better," Källenius said in an interview with CNBC.

On the investor return front, Mercedes also announced a new buyback plan, committing up to 4 billion euros towards that effort by 2025, in addition to proposing a hike to its dividend to 5.20 euros/share, up from 5 euros in 2022.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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