Mercedes to start 1 billion euro share buyback programme

[BERLIN] Mercedes-Benz will buy back as much as 1 billion euros (US$1.2 billion) of its own stock starting this week, extending a capital-return programme even as it grapples with waning sales in China.

The German carmaker’s supervisory board approved the programme, which will start on Tuesday (Sept 1) and be completed by April 6, Mercedes said on Monday (Aug 31). The move formalises plans it had already flagged with its second-quarter results in July. The repurchased shares are to be cancelled.

Mercedes has been trying to balance shareholder returns with investments in electric vehicles and software as competition intensifies, particularly in China. It completed a separate 2 billion euro buyback earlier this year.

The carmaker’s shares were little changed in early Monday trading in Frankfurt. The stock is down more than a fifth this year.

The company’s cars division posted an adjusted return on sales of 4 per cent in the second quarter, well below its ambitions. Mercedes has been cutting costs and trimming capacity while chief executive officer Ola Källenius pushes a product offensive that includes the new CLA sedan and electric GLC sport utility vehicle.

The buyback will be carried out through an independent bank and may be suspended during separate employee share-purchase programmes expected in November and March, Mercedes said. BLOOMBERG