STUTTGART, Feb 17 Reuters MercedesBenz Group on Friday beat analysts39; forecasts with annual earnings of 20.5 billion euros 21.80 billion, but the premium carmaker warned of lower earnings this year due to economic uncertainty.

The company39;s forecast chimes with warnings from across the industry of a challenging year ahead, with Germany39;s autos association predicting that car sales this year would hit around 74 million vehicles globally, up 4 from last year but still 8 below prepandemic levels.

The company hit its forecast of a 1315 adjusted return on sales in the cars division, reporting a 14.6 margin for 2022.

But it forecast a lower adjusted return of 1214 on sales for the cars division in 2023 and group earnings slightly below 2022, even though sales at the MercedesBenz Cars business are expected at the same level.

Daniel Roeska, analyst at Bernstein Research, said Given the rising input cost, we are encouraged Mercedes is putting value over volume and planning with flat volumes in 2023 to protect pricing.

CFO Harald Wilhelm told analysts and reporters that reducing costs as planned was not a walk in the park given inflation but the company was sticking to a cost reduction target of 20 by 2025 from 2019 levels.

Shares were up 2.1 from Thursday39;s close at 74.13 euros at 0845 GMT.

Rival Volkswagen has reported earnings at the upper end of its target but a net cash flow that was far below target because of supply chain bottlenecks. VW has also forecast a…