By Victoria Waldersee

BERLIN (Reuters) – Mercedes-Benz said on Wednesday it expects full-year group earnings at least 15% above last year’s levels and raised its margin forecast for the cars division, which saw earnings nearly triple from pre-pandemic levels in the third quarter.

The luxury carmaker now expects 13-15% in adjusted sales returns for the cars division this year, and 9-11% for Mercedes-Benz Vans, from previously 12-14% and 8-10%, respectively.

The marked increase in profitability at the luxury carmaker comes after it pledged in 2020 – then as the Daimler Group also including the since spun-off Daimler Truck – to cut fixed costs, capex and R&D spending at Mercedes-Benz by more than 20% by 2025.

In the third quarter of 2019, the cars division saw 1.4 billion euros in earnings from 23.5 billion in revenue, but in this year’s quarter, it reaped 4.03 billion euros from 28.2 billion revenue, Wednesday’s statement showed.

“We are making the company more resilient and setting the pace for the months ahead, as we continue accelerating our transformation,” chief financial officer Harald Wilhelm said in a statement.

Group earnings reached 5.2 billion euros from July to September, with revenue up by a fifth to 37.7 billion euros, adjusted returns of 14.5% for the cars division and 12.7% at Mercedes-Benz Vans.

Mercedes-Benz Vans saw sales up by just under a fifth to 104,000 vehicles, with electric van sales up by a third this year so far.

Top-end luxury sales lifted revenues, making up 15% of overall cars sales in the third quarter.

The company cautioned that high inflationary pressure and ongoing supply chain bottlenecks made the outlook more difficult.

Still, it expected slightly higher sales in the fourth quarter than last year, Wednesday’s statement said.

($1 = 1.0047 euros)

(Reporting by Victoria Waldersee, Editing by Miranda Murray & Shri Navaratnam)

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