Tuesday, March 9th, 2021
Red numbers, great confidence
Continental has to keep fighting and hopes
The automotive supplier Continental will have to acknowledge high losses just below the billion mark for 2020. In addition to the corona crisis, the Group's restructuring is also having a negative impact on earnings. But it should pay off in 2021: The group expects a much more successful year.
The corona consequences and the expensive corporate restructuring have kept the world's second largest auto supplier Continental in the red in 2020. The bottom line was a loss of 962 million euros, as the Dax group reported in Hanover. In the already difficult year before, the minus was 1.22 billion euros.
The global auto economy has recently continued to slide because the demand for vehicles fell sharply due to the restrictions in the pandemic and there were also problems in many supply chains. This was also noticeable in Conti's sales, which fell by around 15 percent to 37.7 billion euros.
The conversion to more software, electronics and sensors is also expensive for the company. This requires high investments, while severance payments are often due to cut jobs in traditional areas. In the meantime, however, savings effects have also taken hold.
After the 2020 fiscal year, which was heavily burdened by the restructuring, Continental believes that sales and operating profit will increase in 2021. With consolidated sales in a range of 40.5 to 42.5 billion euros, an adjusted operating return of between five and six percent is expected, said Continental. "In the medium term we are aiming for organic growth at group level averaging around 5 to 8 percent per year," said CEO Nikolai Setzer, according to the announcement. "For the adjusted EBIT margin we have set between around 8 and 11 percent." Last year the yield dropped to 3.5 percent. However, the return to the record level of 2017 is still not expected before 2025, the DAX group confirmed its medium-term assessment. 2021 "got off to a cautious start" due to the delivery bottleneck in the semiconductor sector, said CFO Wolfgang Schäfer. The group is sticking to the plan to spin off the Vitesco drive division in the second half of the year.
The course is controversial within the group. In Germany alone, around 13,000 jobs at Continental will be on fire by 2029, and around 30,000 worldwide. The dividend for the past year should be canceled. The new CEO, Setzer, wants to push ahead with the reorientation towards future technologies.
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