The car supplier and tire manufacturer Continental In the first quarter, the problems in the automotive supply sector were once again strongly felt and the current business was in the red. With an earnings margin before interest and taxes of minus 4.3 percent, adjusted for special effects, the division slipped significantly more into the red than experts expected.
A year earlier, the Hanoverians’ problem child had achieved a slightly positive margin of 0.8 percent. Conti’s sales in its business with car manufacturers also fell short of expectations, with a decline to 4.8 billion euros (previous year: 5.0).
Surprising news after the market closed
On the one hand, weak sales volumes in Europe had a negative impact, and on the other hand, there were still pending renegotiations of prices in customer contracts, the Hanover DAX company surprisingly said on Tuesday after the stock market closed. In addition, there was also a weak development in the market due to delayed product launches. Higher wages would also have had a negative impact on profitability.
In the group as a whole, sales of EUR 9.8 billion were also below financial market expectations and below the previous year’s figure of EUR 10.3 billion. Thanks to the tire division, the Hanover-based company probably achieved a positive operating margin overall of 2.0 percent – but a year ago it was still 5.6 percent.
Despite the results in the first quarter, the management around Niko Setzer (52) expects to be able to achieve the annual financial targets in all divisions and the entire group, so Conti confirmed the forecast. Conti will present the detailed figures for the first quarter on May 8th.
Investors took the news poorly. In an initial reaction, Continental shares slipped by more than two percent on the Tradegate trading platform.
Another low blow for Continental boss Nikolai Setzer: After brake problems, the major customer has to BMW Recall hundreds of thousands of vehicles. The damage can amount to up to 400 million euros – and BMW is said to have excluded Conti from all new orders for the time being, as manager magazine reported.