Black day for Continental. The German equipment maker fell Wednesday about 14% on the Frankfurt Stock Exchange, its largest decline since 2009, causing in its fall the European automotive values.
At the Paris Bourse, Michelin, Valeo, Faurecia or Peugeot also gave ground – but to a lesser extent -, just like Pirellli in Milan or Daimler, BMW and Volkswagen in Frankfurt.
At issue: a downward revision of the forecasts of the Hannover Group for 2018, which comes after a first warning on its results in April.
The equipment manufacturer, which is 46% owned by the Schaeffler family group, is now operating margin more than 9%, compared with more than 10% previously. Continental is also targeting a turnover approximately EUR 45 billion, compared to EUR 46 billion initially.
Increased costs
The group of 240,000 employees, which recorded a turnover of 44 billion euros in 2017, justifies this prudence by sales worse than expected in its automotive divisions in Europe and China. Its tire division, the most profitable group, suffers from a weak demand in these two regions.
Also involved: an increase in its development costs, while the group is also spending more to adapt its products until now dedicated to the engine to the arrival of hybrid and electric cars.
“This warning shows that the great growth spurt experienced by Continental in the past has slowed down,” said Ferdinand Dudenhöffer, a professor at the Car Research Center (CAR) at the University of Duisburg.
The latter highlights the increased competition with players such as the American equipment supplier TRW, recently bought by the German ZF, or software publishers like the American Nvidia in autonomous vehicles.
Large reorganization
To adapt to the upheavals caused by the rise of the electric and autonomous car, Continental announced in July a vast reorganization and the IPO of its Powertrain division from mid-2019. In particular, the operation must allow it to carry out the major investments needed in the technologies of the future.
In June, his compatriot Daimler also downgraded its annual forecasts , including questioning the trade war between Washington and Beijing.