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April 28th, 2022 | 12:04 CEST

Mercedes-Benz, Edison Lithium, K+S - Strong gains from the start

  • Electromobility
  • Lithium
  • fertilizer
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Mercedes-Benz AG scores with a good return on cars and vans in the first quarter of this year. Luxury and electric, in particular, are selling like hotcakes. Despite the pandemic, delivery problems and the lapsed Russian business, shareholders are benefiting from the current share price. To meet the demand for electromobility, areas with mineral resources such as lithium and cobalt are becoming increasingly valuable. These metals are used in batteries to power electric vehicles. The fertilizer company K+S is also providing drive in the agricultural sector. With its products, farmers generate almost twice as much crop yield. However, this disturbs a delicate balance, prompting the German Federal Ministry of Research and Education to take action.

time to read: 4 minutes | Author: Juliane Zielonka
ISIN: MERCEDES-BENZ GROUP AG | DE0007100000 , Edison Lithium Corp | CA28103Q1090 , K+S AG NA O.N. | DE000KSAG888

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    Terry Lynch, CEO, Power Nickel
    "[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel

    Full interview


    Mercedes-Benz - First-quarter profit increase

    There are good prospects for Mercedes-Benz (XETRA:MBG) shareholders. The Company reported an adjusted return on sales of 16.4% in the Cars sector and 12.6% in the Vans sector in Q1. On the one hand, this is due to the strong prices that the Stuttgart-based automaker has pushed through. On the other hand, it is due to the mentality of the Swabians, the thrifty and hard-working people who have earned a lasting identity among Germany's population groups with "Schaffe, schaffe, Häusle baue." ("work, work, build a house"). Mercedes-Benz keeps a sharp eye explicitly on production costs.

    In this regard, CFO Harald Wilhelm explains, "In this challenging environment, resilience and price penetration are particularly important. Our increased focus on desirable top-end and electric vehicles combined with continued cost discipline has enabled us to deliver strong results despite fierce headwinds. On this basis, we are successfully continuing our transformation, particularly by expanding our luxury segment, ramping up production of our electric vehicles and accelerating our software business."

    According to Forbes, the super-rich are the winners of the pandemic. In less than a year, the number of millionaires rose from around 2,000 to more than 2,700. Their net worth climbed by more than 60% to reach more than EUR 4 billion. It is no wonder that Mercedes-Benz is posting whopping profits in the luxury class. Demand for electric vehicles is also as strong as ever.

    Edison Lithium - Profitable metals in the portfolio

    For automakers to continue to meet the demand for electric vehicles, high-performance batteries are needed. Lithium and cobalt are used to a large extent in these batteries. The world market for the alkali metal lithium is growing rapidly. Annual production in the main producing countries rose from 25,400 to 85,000 tons between 2008 and 2018. These main producing countries are Australia, Argentina, Chile, and China. Those looking to profit directly from these valuable metals need to take a closer look at Edison Lithium.

    Edison Lithium Corporation is a Canadian-based junior mining exploration company focused on the sourcing, exploration and development of cobalt and lithium properties. The Company purchases areas where the metals occur and have high proven potential. Edison is also expanding its portfolio of high-quality properties to supply the battery industry with the critical materials.

    The advantage for the young Company is obvious. While carmakers are waiting for components, such as in the semiconductor segment, Edison Lithium Corporation continues to operate. Shareholders benefit from the ongoing business. Recent drilling at one of its sites in Argentina revealed a high occurrence of the coveted metals.

    K+S - Focus on the environment with strong growth

    Water is used in every major industry. Whether for cooling large industrial machines or in mining and quarrying. The listed fertilizer producer K+S participates in a joint project to test a new process for treating saline water and recovering dissolved minerals. K+S mainly produces potash-containing fertilizers for agriculture. Without mineral fertilizers, farmers' grain yields would be lower, so potash is regularly used in the fields. However, like all raw material production, potash mining is also associated with strong interventions in nature. By using the example of saline water from tailings piles of the potash industry, it is to be investigated whether a new process offers advantages in the treatment of water compared with the conventional one on an industrial scale. Together with the Federal Ministry of Education and Research and other partners, K+S is making a strong commitment to the environment. In this connection, the volume of saline water at the K+S Werra plant has already been reduced by 60% since 2000.

    Because of the Russia-Ukraine conflict, there are already shifts in grain production. Ukraine is considered the breadbasket of the West, and African countries, in particular, are major buyers of the crop. With their failure, robust agriculture in other countries becomes all the more important. That is because potassium increases the natural resistance of plants to fungal diseases, as the nutrient strengthens plant tissue. Like lithium in electric batteries, potash is a means of bringing agriculture up to speed and increasing the harvest size.

    K+S AG is Europe's largest supplier of potash for use in fertilizers and, following its acquisition of Morton Salt, the world's largest salt producer. The Company also produces and sells other mineral fertilizers, such as those made from magnesium and sulfur. The stock is currently trading at EUR 30.35 and has experienced a bullish run since the Russian war of aggression.

    Despite the pandemic and declining Russian business, the Mercedes-Benz Group is showing robustness in its first-quarter sales gains. The Stuttgart-based automaker scores particularly well in the luxury segment and in electric cars. Those who bet right from the start on metals such as lithium and cobalt, which are used in electric car batteries, are thus diversifying their portfolio and are literally right at the beginning of the supply and production chains. Further diversification in fertilizers also seems advantageous in light of the dislocations in the global markets caused by the tense political situation in Ukraine.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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