Good morning, ladies and gentlemen. This is Christina Schenck speaking.

On behalf of Mercedes-Benz, I would like to welcome you, both on the telephone and online, to our Q1 results conference call. I'm very pleased to have with me today Harald Wilhelm, our CFO.

To allow more time for your questions, Harald will give a brief introduction and walk you through our financials. We will then move directly into the Q&A session.

The corresponding presentation is available on the Mercedes-Benz Investor Relations website. With that, I will now hand over to Harald.

Thanks a lot, Christina, and welcome, everyone. Very happy to take you through the highlights of the first quarter, which was another eventful quarter geopolitically and for us as well.

Let me get started with the execution of our strategy before I move then to the financials and the outlook. Our product ramp-up is gaining momentum.

As outlined, we're executing the most comprehensive renewal and expansion of our product portfolio. The new S-Class, you certainly didn't miss this one, remains a cornerstone of our top-end strategy.

We didn't stop there. We also unveiled the new Mercedes-Maybach S-Class in China, particularly important and very successful in the Chinese market.

In 2025, every second S-Class sold in China was a Maybach. This was complemented by the new EQS, now offering an 800-volt system with fast-charging capabilities, more than 900 km of range, and steer-by-wire technology, which is really cool.

We continued the S-Class story on the SUV side, presenting the new GLS in the US alongside the GLE and the GLE Coupé. Last week, the all-new electric C-Class premiered in Seoul.

Following the GLC, which has seen very strong demand, it is the second vehicle on our MB.EA architecture and our first electric C-Class. Frankly, it looks pretty stunning.

On the van side, the all-new VLE had its world premiere. Built on our new, highly flexible van architecture, it marks the beginning of a new era for the Vans division.

We will take this even further. Besides the upcoming VLS, we announced the Mercedes-Maybach VLS, offering true luxury and expanding our top-end portfolio further.

By the way, all of these vehicles come with MB.OS, our own operating system, featuring the latest entertainment stack, point-to-point assisted driving, and much more. By the way, talking about MB.OS, as previously emphasized, MB.OS enables us to partner globally with the leading tech companies.

Level 2++ is already on the road in China and is coming to the US later this year. We also go beyond as we work with robotaxi companies on robotaxis with partners.

We are further strengthening also our "local for local" strategy. In China, the all-new GLC Long Wheelbase with China-specific entertainment and Level 2++ was unveiled at Auto China.

GLC is closing the BEV white spot in our portfolio. In the US, alongside the presentation of the new key products for this market, we announced investments of more than $7 billion until 2030.

The US is a strategic growth market for us where we are further strengthening our footprint. With this, I would now turn to the financials on page four.

Looking at the group KPIs, first, the group revenue developed broadly in line with the sales development at Cars in the first quarter. The EBIT came in at a solid €1.9 billion.

EPS stands at €1.49. Free cash flow healthy at €1.9 billion.

That brings us to a strong net industrial liquidity of almost €34 billion before obviously paying the €3.3 billion divi, which we did earlier this month. Looking at the car sales, we ended the quarter with 419 [units?]

, in line with expectation. The sales development was impacted by China.

If you look ex-China, total sales increased by 5%. Top-end sales particular were resilient in China, maintaining a global sales share of 15%.

Core and Entry were lower due to China, while growing by 7% ex-China. The global BEV sales developed well, up 9%.

In Europe alone, we recorded a growth of 34%. This is largely driven by the CLA.

Obviously, the remainder of the portfolio is currently ramping up with more yet to come. Looking at the car financials, the sales I explained already.

The ASP in the first quarter was lower, but slightly up compared to quarter four. This also drives the revenue development.

The EBIT adjusted is at €900 million as expected, and the CFBIT adjusted stands at 3.4%. Now let's have a look at the EBIT evolution, the EBIT bridge on page seven, a bit more in detail.

In the quarter one, Cars delivered an EBIT adjusted of around €900 million and a return on sales adjusted of 4.1%, well within our full-year guidance range of 3% to 5%. What are the main puts and takes on the walk?

The volume, structure, and the net pricing is actually slightly negative. However, the bucket is lower overall, mainly due to the tariffs, product enhancements, lower China contribution, and a lower fixed cost capitalization.

The FX, I think, is self-explanatory on the chart. On the industrial performance side, the underlying industrial performance is positive, driven by continued efficiency improvements that more than offset headwinds from raw mats and higher depreciation following our numerous product launches.

However, on top, Q1 was impacted by several one-timers with negative items in the industrial performance on product-related measures and positive items largely in the other bucket. Overall, one-timers, however, were a wash in Q1.

Then on the SG&A and the R&D side, you see they were positive, reflecting our further efficiencies and having left the funding peak behind us. Turning to the cash, Cars achieved a strong adjusted CFBIT of €3.4 billion.

How did we get there from the €800 million of the EBIT? We generated significant working capital tailwind that reflects our continued effort to improve the working capital, including a favorable inventory structure and improved payables, mainly related to the production ramp-up.

A part of this should unwind over the course of 2026. We further see proceeds from net financial investments.

That's mainly due to the continued sale of our retail outlets in Germany. Depreciation exceeded investments as we have passed the investment peak.

Total investments are lower, in line with our plan as flagged in February. Overall, the level reflects our continued focus on investing in technology and competitive products on the R&D side while also demonstrating a highly disciplined total CapEx approach.

These positive effects were partly offset by a negative other bucket with cash-outs related to restructuring charges of around €800 million, dealer provisions, as well as the adjustment for the BBAC equity result. As a result, we recorded CFBIT of €2.6 billion.

Adjusting for the special items, it's at 3.4. Looking on the Vans side, sales volume came in at 80,000 units.

In China, we saw a softer consumer demand for mid-size vans. Excluding China, Vans were able to grow year on year despite a particularly competitive environment in the US and Europe.

eVans sales increased by almost 30%, lifting the global EV share to 8%. Revenue development is broadly flat.

On the EBIT, we have a look on the next page. Before, quickly on the cash flow, the main driver of the CFBIT were the planned investments into the new van architecture.

Investments are expected to peak this year, strategically preparing Vans for the future. This, I think, is a good moment to remind you that this represents the largest product investment program in the history of our Vans business.

It underpins a highly attractive and scalable product pipeline, including the all-new VLE, VLS, and VLS Maybach, alongside a broad range of private and commercial derivatives built on a highly flexible modular architecture. At the same time, we're completely remodeling our global production footprint with investments in Vitoria, Charleston, and Jawor to enhance flexibility, efficiency, and competitiveness.

Working capital was a headwind driven by temporarily higher inventories, as well as a higher value of stock from eVans. Now looking on the EBIT walk for Vans, Vans achieved an EBIT adjusted of €450 million and once again delivered a benchmark double-digit return on sales of 10.1%.

Let me guide you through the buckets. The volume, structure, pricing is lower, reflecting a lighter product and market mix, negative net pricing partly offset by positive effects from an increased leasing portfolio.

FX is a headwind, mainly driven by the Turkish lira, which was largely offset through pricing. Industrial performance is flattish.

SG&A, R&D, and others are a wash. Looking on the Financial Services side, we have migrated to the new setup, which is working well and is enhancing our competitive offering in the market, which is also reflected in a higher penetration rate in the first quarter.

At the same time, we continue to sharpen our focus on the core Financial Services business as evidenced by the signing of the Athlon agreement and the divestment from Blacklane, both expected to complete later this year. New business volume declined by 4% to €13.1 billion, reflecting sales development and adverse FX effects.

The portfolio stood at €130 billion at the end of Q1, broadly unchanged versus year-end 2025. Financial Services delivered a strong performance in Q1 with a return on equity of 13.3%.

EBIT adjusted increased by 44%, supported by continued positive trend in portfolio margin, improved cost efficiency, while at the same time, the cost of credit risk remained elevated, reflecting a weaker global economic outlook. Let's have a look at the group numbers.

On the EBIT side, Cars, Vans, Financial Services, I explained already. That results in a solid adjusted group EBIT of €1.8 billion.

We had some adjustments in the first quarter: additional restructuring charges of €175 million for our NLPP personnel cost reduction program, and M&A adjustments mainly related to Athlon following its reclassification as asset held for sale. With this, the group EBIT booked sits at €1.9 billion.

On the cash flow, Cars and Vans I covered already. Cash taxes are positive due to refund related to 2025.

Interest paid is negative due to seasonality of coupon payments and higher interest environment. Interest income was positive with more than €100 million.

On the free cash flow on the industrial side altogether, this is at €1.9 billion. The adjusted figure is significantly higher at 2.8, mainly due to the NLPP cash-outs of almost €1 billion in the first quarter.

On the NIL bridge, page 14, by the end of the first quarter, the NIL increased to close to €34 billion. That is a pretty comfortable level.

Of this NIL, we paid €3.3 billion as a divi to our shareholders last week. What's the status on our share buyback program, our €2 billion program?

It's in full execution. In Q1, share buybacks totaled €470 million.

In total, as of today as we speak, we bought back shares worth more than a billion since inception of the program. Following the AGM, share buyback has accelerated significantly.

With regard to the DT stake, we continue to monitor market development and capitalize on opportunities as they emerge. Now turning to the outlook and the guidance, getting started with the divisional guidance for 2026.

Please consider the disclaimer regarding forward-looking statements at the end of this presentation in relation to the outlook. Important to note, the war in the Middle East adds further uncertainty to an already high level of uncertainty in the global economic environment and automotive markets.

The outlook assumes no prolonged conflict with respect to potential impacts on material, raw material, and energy prices, inflation, and sales trend. Assumptions are based on today's regulatory framework and on the US-EU tariff rate expected to be reduced to zero now effective August 2026.

On the car side, the sales guidance for 2026, we retain an overall constructive view with targeted growth ex-China. Global sales volume is expected to remain at prior-year level.

Product transitioning is impacting the sales volume as expected, with sales in Q1 being the lowest and building momentum in H2. xEV share is unchanged.

With quarter one well within the guidance range, we continue to see adjusted return on sales between 3% to 5% as guided. Equally, PP&E, R&D, and CCR remain unchanged.

On the Vans side, I can also make it pretty short. The sales guidance and the xEV share are unchanged.

We continue to see adjusted return on sales as guided between 8% and 10%. No change to PP&E, R&D, and CCR.

Also on the Financial Services side, short and sweet, given the current interest rate volatility, we continue to see the full-year guidance unchanged in the range of 10% to 12%. Looking at the group guidance, page 16, it follows obviously the same premises as the segment guidance.

In line with the unchanged divisional guidance, all group guidance remain unchanged. Equally, on the free cash flow industrial guidance, this remains unchanged before additional proceeds from major M&A activity.

Now turning a bit more to the outlook for the remainder of the year, what's ahead. The 2026 ramp-up is in full motion.

We see strong demand for all our all-new electric models. In Europe, BEV order intake has more than doubled compared to prior year's quarter, up by 107%.

New models resonate well with our customers. The order books for the new CLA, the GLB, and the GLC are filled well into the second half of the year.

CLA and GLC production are running at three shifts, and an additional Saturday shifts for the GLC. The S-Class is now available to order in Europe.

First deliveries are starting in second quarter. In US and China, this will follow in quarter three.

We also reskinned completely our large SUV portfolio with the GLS, the GLE, the GLE Coupé, including AMG versions. The order books on these ones will open soon.

On the VLE, the order book is open in Germany. The rest of Europe will follow soon.

With this, we are confident that we can build on that momentum as our model ramp-up continues in quarter two, with momentum being built in H2. Last page, page 18, well, one of my personal highlights, the all-new Mercedes-AMG GT 4-Door Coupé, which will be introduced in Los Angeles on May 19th.

You should really block this in your calendar. It will be our first model on AMG's electric high-performance architecture, AMG.EA.

This car will set new benchmarks and embody true AMG DNA. Very much looking forward to that one.

Thank you for now. With this, I hand back to Christina.

Thank you very much, Harald. Ladies and gentlemen, we will now move on to the Q&A session.

I will identify each questioner by name. However, before asking your question, please also state your name and the name of your organization that you represent.

A few practical points: please ask your question in English, and for reasons of fairness, please limit yourselves to a maximum of two questions. Before we begin, the operator will briefly explain the procedure once again.

We start the Q&A, and the first question goes to Tim Rokossa, Deutsche Bank.

Thank you very much. I think now you hear me.

It's Tim from Deutsche Bank. Thank you, Christina.

Thank you, Harald. Two questions, please.

The first one, Harald, given there was quite a bit going on, just for modeling and contextualizing your full-year guidances, how should we think about one-timers going forward? Is there anything material that you already have in the agenda that we should already think about in our modeling in the coming quarters with respect to cash and earnings?

I'm also thinking about your restructuring program, lots of outflows in Q1, obviously some performance impacts that you already see in Q1 as well on the P&L. Where do we stand on that side?

Then secondly, you already quickly touched on this, but it is a big topic obviously, how should we think about raw material inflation in the second half of the year? Is there anything that you're planning already?

You said you start to see it a bit, but it's a bit uncertain. How should we think about this?

Thank you.

Thanks a lot, Tim. With regard to one-timer, as you mentioned them, number one, would like to re-emphasize that globally in the first quarter, they are a wash, as I outlined when going through the EBIT bridge a bit before.

When I look at the full year in terms of the outlook, obviously as we guide also at the group level on an EBIT reported basis, everything which we have in mind, which we know, is included in there. You could see a step-up in the restructuring provision for our personal cost reduction program in the first quarter.

I do not expect any further material addition in the restructuring provisioning on the EBIT side nor any other material restructuring elements. Otherwise, we would have included them obviously in the group guidance outlook.

On the cash side, I think put it clear in the outlook as well on the free cash flow reported for the group that this is before material M&A. What is in our mind here, what is included in the guidance at this stage, are minor M&A activities, smaller divestments in terms of our own retail divestments, larger ones to come to the extent they close in 2026, obviously would further support cash generation.

What else comes to mind? Athlon closing is expected in 2026.

However, that will not sit in free cash flow, but certainly will enhance the net cash position, and we would consider that obviously also in capital allocation. Your favorite ones on DT, no material divestment is assumed in the number.

That's why this guidance is before material M&A cash flow. In other words, if you take that guidance on the free cash flow as outlined before in terms of total cash generation, I would say there are some distinct opportunities to enhance cash generation further.

The capital allocation framework, what we're supposed to do with it. On the second question, on the raw mats, well, you can see in the first quarter bridge already in the industrial performance that we face some raw mats headwinds.

We do expect raw mats to step up further in the remainder of the year, higher than what we anticipated at the beginning of the year, also driven by the Middle East crisis and the global macro situation. That is included, however, in the outlook for the full year in line with this 3% to 5% guidance, which we confirm here today.

Very clear. Thank you.

Thank you, Tim. We move on to the next question, and it goes to Mike Tyndall from HSBC.

Yes. Morning, folks.

Thanks for taking my question. It's Mike Tyndall from HSBC.

I guess first question, just around products, the new products specifically. If I think about the Capital Markets Day and the plan in terms of product cost savings, it feels like the big step is to come forward.

Is that what we're going to see as these new products ramp? I'm just trying to think about very strong order intake.

How does that translate in terms of EBIT? Then I guess the second question, I guess in some ways it's self-explanatory, but Q1 is arguably the toughest quarter in terms of FX and tariffs, and you've hit the middle of the range.

Is the reason we haven't seen an upgrade simply because it's a pretty uncertain world out there? Because it does feel like you're well set up for the rest of the year now.

Thanks.

Thanks, Mike. Number one, yeah, on new products, we're very pleased to see the momentum, the order intake numbers going up.

I mentioned the BEV numbers in terms of order intake in Europe, 107% up. Obviously, you don't see that in sales yet, but is a good indicative for what is to come.

That's what we have been working for so hard. That's what you had been waiting for so patiently.

That's what we want to bring to fruition in the course of 2026 and obviously beyond that. At the same time, we do know that the EV vehicles carry higher variable cost than their brothers and sisters on the ICE side.

That's why we engage into significant cost savings over time. That should help to improve the margins on these EV vehicles over time, '27, '28.

During the CMD, we outlined that we see the possibility to go to margin break-even between ICE and EVs towards the end of the decade, all costs including CO2 being included. We're exactly I think on that path.

This is also a bit of an answer to your second question. Obviously as we're ramping up BEVs in the second half of the year, the volume goes up, but there's a bit of dilution coming along with it.

Then no, quarter one is not the worst in terms of the tariffs. Actually, quarter one on tariffs is slightly mitigated due to the IEPA refund claim, which we included in the books and the records.

Actually, the quarter one tariff impact is around 100 bps, whereas we expect for the full year still 150 bps. We'll have some headwind coming from the tariff side in the remainder of the year, from higher raw mats as I answered Tim's question before, and the third, I would say, is the BEV dilution I just mentioned before, and then obviously the depreciation which kicks in with the new models coming off the production line.

That's why, in terms of the remainder of the year, despite the momentum and some volume growth in H2, we see the guidance in the 3% to 5% corridor for now.

Got it. Thank you.

Thank you, Mike. We would move on to the next question, and it goes to Jose Asumendi from JP Morgan.

Sorry. Jose, can you hear us?

Jose, I'm sorry. We cannot hear you.

We will try again. Then let's move on to the next one, and I will hand over to Stephen Reitman from Bernstein.

Stephen, over to you.

Good morning. Two questions, please.

On China, can you give us some idea of the timetable of the launch of the GLC electric in terms of when you're going to be announcing the pricing on that vehicle? Obviously, it's very early days since the display of the long wheelbase version in China, but if you could talk a little bit about the reactions you're seeing from your dealers and from any other relevant sources you can talk about.

Secondly, on the EV demand, are you seeing what feedback you're getting from the dealers about customer interest, maybe moving more towards BEV because of high fuel prices? Thank you.

Thanks, Stephen. On the timetable, the GLC Long Wheelbase is expected to hit China market in quarter three, at the turn probably quarter three, quarter four, if my memory is correct.

We will set the pricing at the right moment of time, I would say, not too early, not too late. I think as you could see also on other products, we'll have a view that this is competitive, however, obviously protecting the brand and the product premium.

The feedback from dealers on the GLC, on the EV product line, on what is to come this year, but also, as from time to time you show a bit the jewelries which are yet to come, also beyond the 2026, is very encouraging. The tech motion which we kicked off with the CLA in terms of MB.OS, in terms of Level 2++, now CLA on the road in China with Level 2++, I think is gaining a good momentum in support of the entire product lineup to come.

That's why we are hopeful that the GLC Long Wheelbase, which was revealed last week during the auto show, will pick up momentum once it's going to be launched in the China market. Your second question, in terms of the EV demand, I would say for Europe, definitely.

We see that very recently with the Middle East crisis, the fuel price spike, the dependencies on fuel, there is definitely a favorable momentum picking up. I cannot tell you how sustainable that is going to be in case the conflict settles, but clearly the product in itself I think are considered as very attractive, true Mercedes.

That is supported, I would say, by the current macro and geopolitical circumstances.

I'll try one more time with Jose. Jose, are you online?

That's not the case. Then let's move on to Christian Frenes from Goldman Sachs.

Yes, let's move on to Christian. Christian, over to you.

Okay. Hello, can you hear me now?

Yes.

Great. I don't know what happened there.

It's Christian Frenes from Goldman Sachs. Two quick questions, please.

Harald, you mentioned the tariff had 100 basis point headwind in Q1, and I think you mentioned 150 basis points headwind for the full year. Just the cadence of this, I suppose should Q2 be the peak tariff headwind then, and then with the reduction in the second half, could you just clarify, please?

Then the second question, in your Cars profit bridge, the other was obviously a benefit. You called that out.

You said it was a wash. It looks like your other operating income and expense talks about a €350 million gain from a settlement from claims against suppliers.

Could you just elaborate what that's about, please? Thanks.

Yeah.

Thanks, Christian. I would say probably the quarters to come should run at around 150 bps dilution from the tariffs.

Obviously depends a bit on the sales from the imports into the US, but globally I would say take it as a kind of 150 bps per quarter to come, I would say. Yeah.

That gives you not exactly maybe 150 bps for the full year, but in the vicinity of. To your second question in the bridge, as I explained, in the other bucket we have some support.

In the industrial performance, we have some negatives. All in all, they are a wash.

What is in the other bucket? Yes, we have included in the quarter one profit a claim towards suppliers which we've been discussing and settling, but you will understand that I will not outline any particular supplier relationships, please understand.

Thank you.

Thank you, Christian. We will then move on to Patrick Hummel from UBS.

Thank you, Christina. Hi, Harald.

Good morning. Thanks for taking my questions.

I'd like to first ask about China. Your sales performance obviously in Q1 wasn't great.

Listening to you, it sounds like it was more in line with your plans because you were not pushing too hard. Is it fair to say that Q1 according to your playbook at least is going to be the weakest quarter for China, and we should see not just sales picking up, and bearing in mind we're talking about also EV sales picking up in the second half, is it still fair to assume that also the profitability should improve despite the dilutive impact of EVs versus ICE cars, just to get a better handle on what you expect from China for the remainder of this year?

My second question, you booked this book gain on Athlon, about €300 million. That asset in itself is worth more than a billion, I think.

Then you marked €2 billion worth of DTG shares as held for sale. That gets me to €3 billion M&A or potentially even more.

In the plan you presented for the full year, you talked about €2 billion. I just wonder whether if you execute all the transactions, if that has any impact on cash returns, or you would stick to basically the framework you presented, and any further proceeds would just give you some buffer maybe for 2027 or so?

Thank you.

Thanks, Patrick. First question on China and China sales, I would say, yeah, China sales first quarter evolution was roughly in line with what we did expect.

We said at the beginning of the year in the full-year outlook, as you remember, that we do expect China sales to be lower in '26 versus '25. What was, in the year-on-year as well, I mean elements, remember that the the banking commissions have come down significantly.

That has a particular impact also on our side. You could also see that we adjusted in terms of go-to-market strategy.

We did adjustment on MSRP. We did negotiate and discuss and settle with dealers in the first quarter, so that had some temporary impact in the first quarter, but consciously, as we were trying to protect as well profitability at our end, as well as profitability on the dealer side.

That came at the at the expense of of volume, but consciously. This is, I think, the important point.

Now as you say, exactly, as we're building the momentum for H2 with all of the products to come, the ones I emphasized, the S-Class, S-Class Maybach, the GLS, the GLE, localized, really cool product, the GLC, GLC electric, the C-Class to come, I think there is a there's a fair expectation this to create volume momentum. Therefore, from today's point of view, I would say quarter one should be the lowest in terms of the sales.

We're not outlining, I would say, the profit by region, but globally I would say that should also have supportive effect in terms of margin generation in the in the second half of the year from China. However, as you can see also in the first quarter, in terms of China contribution, supplies to China, BBAC result, it's a tough, competitive market environment.

That's why, next to the product momentum, we are taking a lot of actions in terms of localization, in terms of sourcing, in terms of cost effort to mitigate the the market situation. Second question in terms of M&A, well, on the Athlon side, you referred to the EBIT side of things, I would say, the gain included at the group level of €300 million, that is basically as we moved Athlon as an asset held for sale, the intercompany margin, which has been stored at the group level during the period we hold Athlon, gets now released as the asset gets divested.

That's a bit more, I would say, a mechanical side of things, accounting side of things, on the EBIT. I think your question refers more to the cash side.

Is there a potential to do more of a €2 billion of cash generation from M&A? I would say yes.

I think you could count Athlon in for maybe up to up to a billion or so. However, it will not hit free cash flow on the industrial side as it sits on Financial Services, but clearly it adds to the net cash position.

I said it before, and I confirm, and we would consider obviously this this amount also in the capital allocation framework, i.e., consider as cash generated, next to the other assets, the own retail, as well as any potential move on on DT stake. Next to the underlying industrial free cash flow, which we confirmed as per the guidance today, I think there is a decent cash upside from M&A.

Thank you very much.

Thank you, Patrick. We will try one more time to connect Jose.

Jose, can you hear us? It doesn't work, unfortunately.

Then we move on to Horst Schneider, Bank of America. Horst, over to you.

Good morning, Harald and team. Hope you can hear me.

The first question that I have relates to EBIT bridge in Cars for 2026. I really liked the details you provided when you released the full-year '25 results and to what extent the various drivers will impact results in '26.

I want to come back on that. Could you maybe repeat again what drives now EBIT in Cars in '26?

I have here in my notes -0.5% from structure pricing, -1% FX, -0.5% raw materials effects, +2% efficiency gains. I think you said already that raw material are going to have a more negative effect.

Maybe you can update us on these drivers for 2026. That's number one.

Number two, I was surprised in Q1 that you had such a positive impact from the trade payables while inventories were also moving down. I wonder why that was, and should we expect going forward some reversal of this trade payable effect?

I'm also not aware if you have provided a guidance for working capital for the full year because I'm thinking, as you rightly say, you're going to increase sales in H2, should lead to an increase of inventories, but also trade payables. I'm not sure about the trade-off, to what extent working capital will be a positive driver in 2026 or not.

Thank you.

Thanks, Horst, to remind us the EBIT walk '25-'26 as outlined during the ARC and the CMD. I think you picked up on most of the elements, but for the benefit of everybody, if you depart from 2025, we said at that point in time, tariffs and FX is a -1, structure and pricing is a -0.5, raw mats is a -0.5, efficiency is a 2, and the depreciation is an 0.7.

That's pretty precise now. Looking at it from a Q1 perspective, i.e., based on the quarter one performance, I will not make an update of each and every item, I would say, but globally I would say tariffs maybe is a bit better, as we included the IEPA refund in the quarter one, as commented a bit earlier.

Structure and pricing would roughly seen the same vicinity. Raw mats, maybe a bit more headwind to come.

Efficiencies, I think we are on track. We're also on track in the first quarter.

I hope the explanation I gave you in terms of reading material for the bridge helped. What sits inside is in sync with the 2% for the full year.

The depreciation is also, I think, in the same order of magnitude as outlined during the ARC. Which means, all in all, would say probably, yeah, a bit more raw mats headwind, a bit less of headwind on the tariffs, and then some puts and takes, but that's why all in all, we confirm the 3%

to 5%.

Point number two, on the trade payables, in the first quarter, on working capital, what is in there, in the first quarter, we increased inventory from the end of the year 2025, which is usually the low point in terms of inventory. You get ready obviously to support the product ramp-up, the new products coming, so that's why inventory went up in the first quarter.

However, the inventory is on the structure and the mix lighter, is improved. Also, the cost efficiencies have an impact on the inventory.

That's why you don't see in the cash flow chart such a burden on the inventory side, it's rather in light or a wash. Whereas on the trade payables, you see a more important amount.

That is a function of the production ramp-up, which is favorable on the payable side, but obviously then, if you move throughout the year, you then will deliver this vehicles as per the sales expectation, and then come back down again in terms of the inventory towards the year-end, towards our inventory targets. We did not set out any specific guidance on working capital.

That's all included in the free cash flow guidances, in the CCRs of the division and the cash flow of the group. Clearly, we have very tight and stringent working capital targets for all of the three elements, the DIO, the DSO, and the DPO.

Next to it, we are also working on further improvements on all of the elements. In particular, here you see a benefit kicking in the first quarter on the payable side, which should also last and be therefore permanent.

In a nutshell, a part of the payables will be temporary, a part will be permanent. I hope that helps.

No, that helps a lot. Thanks for that.

Just small follow-up on raw materials. Is the increase in raw materials not impacting also your suppliers so that it will be more difficult to cut the material costs as much as you want?

I think it's an industry phenomenon. It not just affects you, but your view on that would be interesting.

We have different contractual arrangements. Some are fixed prices, obviously, and on some you have more floating.

That's why, all in all, we included a risk assessment in terms of raw material evolution for 2026. That is included in the outlook as I pointed out before.

Okay. That's great.

Thank you, Harald.

Thank you, Horst. We will now move on to Henning Cosman from Barclays.

Hi. Good morning, everybody.

Thanks, Christina. Thanks, Harald.

I wanted to come back on the operating free cash flow. I know we talked about the working capital a lot, but I think the bouncing around a little bit whether there could be upside to the operating free cash flow guidance.

I understand there's upside from the M&A piece. If we think of the about €4 billion and some of the payable effect in Q1 being sustainable now, and the momentum that you hope to generate in the second half, would you be prepared to make a statement if there's a bit of upside?

The about €4 billion is obviously open-ended anyway, but any sort of additional color if you could would be great. In a related sort of question, also ultimately free cash flow, I suppose you called out quite prominently the investment in the US in the press release at least, perhaps not so much in your prepared remarks now.

I'm just wondering if there's anything incremental there, anything at all to do with continued hope for more favorable tariff treatment eventually, is there still anything ongoing in terms of bilateral conversations with the US administration? Separately from that even, is there anything incremental in terms of the CapEx of investment plan that you're calling out for the US today?

Thank you very much.

Thanks, Henning. I had some difficulties frankly to understand some elements of your question from a voiceover, but first one, if I get it right, was on the free cash flow side of things, the operational free cash flow side.

The M&A side of things I commented already before, I would say. I think on the operational free cash flow has a good start of the year, as outlined before, supported by working capital, payables.

Yes, some element will reverse in the course of the year. On the other side, well, you have a billion of NLPP cash-out sitting in the first quarter, which should not repeat in the remainder of the year.

A large chunk of cash-out on the restructuring program, that is behind us. Obviously, that will help the cash generation in the remainder of the year.

Then we'll focus on all of the other levers, in terms of efficiencies anyhow, but also then on the attempt to manage the inventory to target, which is always a bit more towards the year-end. In quarter two, quarter three, we are on the ramp-up mode for the new products.

You will see some seasonality obviously here in the cash generation, as you can see also in previous years, but probably more emphasized, more supported, given the high number of product launches we're doing. I would say based on the quarter one cash flow, therefore with the elements I outlined on working capital, on NLPP, I think we feel good with the guidance of slightly below, and you know what the corridor is, of slightly below compared to the €5.4 billion which we printed in 2025.

Your second question in terms of further investments in the US and impact, favorable impact on tariffs or deals, well, we I think had a important event with the GLS and the GLE reveal in the US in Tuscaloosa, Alabama, in March. We celebrated at that moment in time the 5 millionth vehicle coming off the line in the US.

I think we could witness with a lot of stakeholders being present during that event that we are considered as a very good corporate citizen over there. We continue to entertain, I think, therefore, constructive dialogue, but I would not speculate about any link between the investment and the tariffs at this juncture.

We are committed to continue to invest in the US as outlined with the $7 billion investment. For 2026, I don't think there is any particular thing to mention.

That is a more mid- to long-term strategic statement we've been doing. Very clearly, we see the potential for further localization in the US, in particular in the SUV core segment.

That is not I think for 2026. That is a bit more in the mid-term.

I hope that answered the questions to the extent I got them.

No, that's great. Thank you.

Just to confirm, no more NLPP payouts this year in the cash, but probably around another €1 billion or so in 2027

then, yeah? We did already in 2025, from memory, a couple of hundred million, €300 million or so, I think in 2025 cash-outs, and then now a billion in 2026 first quarter.

We will still have some cash-out in 2026 remainder, but obviously much lower than the billion in the first quarter, and then from today's point of view, we should be done with that.

Very good. Thank you.

Obviously, the benefit kicking in in terms of the people have come off the payroll to a large extent by the end of the year, throughout quarter one, and obviously that will create run-rate benefit moving forward. That's why we did invest into it.

That's great. Thanks, Harald.

Thank you very much, Henning. We'll move on to Stuart Pearson from OxCap Analytics.

Good morning. Thank you for taking my call.

Stuart Pearson from OxCap Analytics. Just following up just very quickly to check my understanding was right on the IEPA refund, just from what you said, I guess it sounds like you're suggesting that was around 50 basis points support in Cars in the quarter.

Just to check if that's correct, and where that would sit in the bridge, I guess in structure, but maybe just clarify on that. Then the second one, just a slightly bigger picture, is coming back to the US, but more the demand side.

I know coming into this year, it's a market you talked about growth, and I think it's targeted to grow there to 400,000 retails by the end of the decade, but I think the retails a bit tougher than that in Q1. Just wondering what you're thinking on the US opportunity.

I guess you'll have a bit more supply from both GLE and maybe that core SUV a little bit later on. Is that still a significant growth market that you're excited about?

What are you seeing in April there? That would be interesting.

Then the third one, just on Financial Services, obviously very strong quarter. Notice credit losses came down there a little bit.

Is there sort of a bit of help from residual values improving a little bit in the US just coming out of the end of that normalization process? Just any color on that strong Financial Services performance would be great.

Thank you.

Thanks, Stuart. In the first quarter, that refund following the Supreme Court ruling has been included in the first quarter results, and that mitigated the tariff impact that sits in Cars, but it sits also in Vans.

That makes basically, as commented, the car dilution limited to 100 basis points in the first quarter. I think we don't spell out the detailed amounts.

Please understand. In terms of the US market, very clearly, we see that as a very important market.

We see that also as a market with good growth opportunities. When I say that, it means I'm not assuming the entire US auto market to grow massively, but clearly we have an attack plan to grab share in areas where we're in particular strong, such as in the top end.

US market, we enjoy a top-end vehicle share of 30%, 3-0. If you look at the product pipeline to come with the new S-Class, with the GLS now, the new GLS and the GLE, which we revealed, and many more products, the AMGs, guess why we're doing the AMG event in Los Angeles in May, I think we can really create a good buzz.

That's what we want to do despite the tariff challenge. This is a distinct decision that we're not holding back, and we are in attack mode for the US market, but based on great products which are in the pipeline.

A third point, on Financial Services, yeah, I think a good quarter, but I would say it should also be decent quarters ahead. What's driving the improvement towards the 13% in the first quarter, definitely it is the interest margin improvement.

We talked about the acquisition margin improvement in the last numerous quarters and said it will come through, you need to be a bit patient, and here you go. That is definitely the biggest lever in the profitability improvement.

Number two, the efficiencies which we continue to drive. The new structure also has significant cost savings and efficiencies which we are able to pull off.

Third, on cost of credit risk, we stepped up, given the macro challenges, it's a headwind, but that has been nicely digested in the quarter one as we update obviously that model based on the macro parameter each and every closing. Your point on residual values, that sits on the industrial side, so that doesn't impact the Financial Services.

Thank you.

Thank you very much, Stuart. Looking at the time, I think we are at the end of our call.

Thank you all very much for your questions and for being with us today. Thank you very much of course to Harald for answering all of the questions.

Now Investor Relations remains at your disposal to answer any further questions you may have. To all of you, have a great morning, a great afternoon, and a great evening.

Thank you, and goodbye.