Sunday , June 20 2021

Continental warns of further sales risks



It should strengthen this trend in the fourth quarter, there is a risk that Conti will reach its announced annual sales of 44.5 billion euros, the company said on Thursday.

Continental cares about the production of cars on two major markets. "Especially in Europe and China, the production of personal cars and light commercial vehicles has fallen considerably," said chief executive Elmar Degenhart, a new caution in Hanover. China and Europe now account for more than half of global automotive production.

Despite this sales risk, Continental keeps track of earnings. "For the whole year, we still expect a custom EBIT margin of more than nine percent," CFO Wolfgang Schäfer said.

In August, Continental reduced its annual target for another earnings this year from ten to nine percent. Even then, the overarching factors were growing problems in China and Europe. In the People's Republic, fewer cars were sold due to trade disputes with the US. In Europe, new WLTP emission standards have created major problems for the entire industry.

Continental quarterly results clearly show a decline over the last few months. Turnover in months from July to September, to EUR 10.7 billion (plus 0.9 percent), has barely increased. This is something completely new for the Conti group, which has only been gained in recent years.

In terms of yield, heavy development during the summer months becomes even clearer. Operating profit (Ebit) fell by almost 18 percent to EUR 1.04 billion in the third quarter. The downward trend becomes even clearer when the operating result adjusts to changes in the scope of consolidation. Then Conti does not reach a single billion: minus 30 percent, the supply group only generates a good 770 million euros.

Due to bad indicators from the third quarter, Continental has also reached substantially below the 2017 level for the whole year. Business results fell by 9.5 percent from January to September, to just under EUR 3 billion. The operating margin is 9.1 percent, compared to 10 percent a year ago.

Big questionnaires from China

For Continental, the group is no longer alone with the bigger problems in the world car markets. Many vendors had to retire their forecast for 2018 in the past few weeks.

Even car makers are no longer spared: Daimler and BMW have warned the financial markets with their own tax warnings. On Wednesday, Schaeffler's group also presented its quarterly figures. Like in Hanover, the franchise franchise's operating margin has also dropped significantly this year.

At present, the largest industry-wide questionnaire comes from China, now the most important sales market for the entire industry. In the third quarter of sales in the People's Republic fell.

It is currently speculating that the Chinese government could decide on buying cars as in previous years. Automakers and suppliers would benefit because a tax cut would probably stabilize demand for the vehicle.

In Europe, the biggest problems with switching to new WLTP standards seem to be overwhelming. Volkswagen, one of Conti's most significant customers, has already announced production growth in the fourth quarter. Production losses from the summer months could be good with special moves.

Given the tough conditions for the entire industry, CEO Conti Elmar Degenhart described it as a positive sign that his company achieved a slight growth of 0.9 percent in the third quarter. "Just like our new automotive orders: with nearly 30 billion euros after nine months, they are almost at a very high level last year and support our strategic orientation," said the chief executive officer.

The stock exchange barely replied to continental quarterly figures. Contiev's paper was almost unchanged at Dax's beginning of trading, but later dumped.


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