Supply business burdened
Continental is slipping into the red
May 8, 2024, 11:05 a.m
Listen to article
This audio version was artificially generated. More info | Send feedback
Supplier and tire manufacturer Continental is making a loss at the start of the year. The bottom line is a net loss of 53 million euros. But the group still has hope for a turnaround in the course of the year.
Continental made a net loss in the first quarter, mainly due to the weakness of the automotive supply division. The net result amounted to minus 53 million euros after a profit of 382 million euros in the same period last year, as the DAX group announced. The main automotive division closed the quarter with an adjusted return of minus 4.3 percent. Sales fell by four percent to 4.8 billion euros.
“The main reasons for this are the lower production volume, especially in Europe, as well as outstanding agreements from price negotiations with automobile manufacturers,” explained Conti. Delayed product launches, weak business in North America, wage increases and exchange rate effects also had a negative impact.
“As the year progresses, price adjustments, initial savings from cost reduction measures and efficiency improvements will contribute to increasing earnings,” the company promised. There are many incoming orders, for example one worth more than 1.5 billion euros for radar sensors for automated driving.
The tire business (Tires) achieved a positive margin of 11.7 percent. The profit margin was slightly lower than in the same period last year due to fewer working days. Stronger growth is expected throughout the year. “For the first time in 2023, Continental supplied tires to all ten of the world’s top-volume all-electric vehicle manufacturers.”
“First quarter will be our weakest”
The group confirmed the preliminary figures for sales published in mid-April (minus five percent to 9.8 billion euros) and adjusted operating profit, which had collapsed by two thirds to just under 200 million euros. Nevertheless, CEO Nikolai Setzer is sticking to the annual target of sales of 41 to 44 billion euros and six to seven percent adjusted returns.
“The first quarter will be our weakest this year,” said Setzer. “Over the course of the year we will improve in the three divisions Automotive, Tires and ContiTech.” The implementation of savings, which also includes massive staff reductions, is making progress.