Mercedes-Benz Q3: Adjusted EBIT Falls 15% as China and Costs Weigh on Outlook
Published on 10/28/2026 at 13:52 | Editorial boerse-global.de
Mercedes-Benz has reported a 15% decline in adjusted group EBIT to EUR 1.78 billion for the third quarter of 2026, a day after cutting its full-year guidance. The figures put operating profitability under scrutiny just as investors weigh how the carmaker will absorb a tougher market in China and higher costs in the final quarter.
Revenue for the reporting period came in at EUR 30.7 billion. Reported EBIT stood at EUR 1.77 billion, while group net profit reached EUR 1.52 billion. The distinction between reported and adjusted earnings matters here: the explicitly flagged decline applies to adjusted group EBIT, not the headline figure.
Cash generation is drawing just as much attention. Industrial free cash flow for the quarter amounted to only EUR 172 million, and since yesterday's guidance change Mercedes-Benz expects this measure to land well below the prior-year level for the full year. Quarterly performance and the annual forecast should be read separately.
Guidance Cut Puts Margins and Cash Under Pressure
The cautious outlook now spans both the car division's profitability and the group's earnings and cash conversion. Mercedes-Benz Cars is expected to post an adjusted return on sales of 2–3%, down from the previous 3–5% range. Group EBIT is now projected to come in at the prior-year level, where the company had previously guided for a significant increase. Industrial free cash flow is seen well below last year's figure.
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Management attributed yesterday's downgrade to an increasingly difficult market environment in China, compounded by higher costs in the fourth quarter, including rising material expenses. The warning therefore touches both the demand side and the cost base.
Two Brokers, Two Readings
Analyst reaction has been split. RBC's Tom Narayan kept Mercedes-Benz at "Sector Perform" with an unchanged price target of EUR 44, a call made yesterday after the guidance cut and before today's results — so it does not reflect the quarterly report itself. JPMorgan, by contrast, maintained its "Overweight" rating and EUR 70 target. Jose M. Asumendi pointed to a relatively weak third quarter and an expectedly weaker final quarter, meaning the positive stance offers no all-clear for the operating business.
The stock came under pressure following the profit warning, falling 3.1% on the day. Reuters reported the guidance cut as the trigger for the selling, while dpa-AFX also noted weakness in the auto sector index, adding an industry-wide drag to the company-specific catalyst.
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Today's interim report and the accompanying analyst call are the next test. The key question is how convincingly Mercedes-Benz can explain the interplay between its China business and higher costs in shaping the lowered earnings and cash flow expectations — a near-term hurdle that the reaffirmed bullish rating does nothing to remove.
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