Mercedes-Benz shares climb 5% on share buyback, despite 'exceptional' uncertainty ahead

Mercedes-Benz shares gained around 5% on Thursday morning after the German carmaker beat fourth-quarter earnings expectations and announced a new share buyback program, despite warning of "exceptional" risks in the year ahead.

Fourth-quarter earnings before interest and taxation (EBIT) came in at 4.33 billion euros ($4.7 billion), slightly ahead of consensus expectations, taking the full-year figure to 19.66 billion euros. Revenues rose 2% in 2023 to 153.2 billion euros from 150 billion the previous year.

The group also announced an additional share buyback program worth up to 3 billion euros, with the repurchased shares subsequently canceled.

However, Mercedes-Benz warned that supply chain bottlenecks for critical components remain a "significant risk factor," and said an "exceptional degree of uncertainty" surrounds geopolitical events and trade policy, particularly in the form of the Russia-Ukraine and Middle East conflicts and tensions between Western powers and China.

The company sees flat growth in 2024 as inflation and supply chain costs bite, while adjusted return on sales for Mercedes-Benz Cars is expected to slip to a range of 10% to 12% from 12-14% in 2023.

Automotive analysts at Jefferies said in a reactive note Thursday that although there were no major surprises in the earnings, the cash return policy was "a sign of confidence and consistent with the premium/luxury positioning, with buyback set to keep EPS (earnings per share) growing."

Mercedes-Benz Chairman Ola Källenius told CNBC on Thursday that the company was well positioned to overcome the various macroeconomic headwinds.

"Today we're presenting very strong numbers for Mercedes-Benz Cars, and really a standout year for our light commercial van division," he