Due to the following factors, Continental’s previous outlook for the 2019 fiscal year issued on May 9, 2019 will no longer be achievable:
- Whereas the previously communicated outlook was based on expectations of a flat development in global light vehicle production in fiscal 2019 versus the previous year, current expectations are for a decline of around 5%. This will result in consolidated sales and an adjusted EBIT margin below the previously communicated outlook ranges. These figures will also be below current analyst expectations.
- Unanticipated changes in customer demand are causing volume declines for certain products in the Automotive Group.
- Potential provisions for warranty claims may reduce adjusted EBIT in the Automotive Group in the second half of the year. The causes of these potential expenses from warranty claims and the corresponding amounts are not clarified at this time.
Assuming constant exchange rates as in the first half of fiscal 2019, the aforementioned factors result in a revised outlook for fiscal 2019 as follows:
- Consolidated sales are now expected to be approximately €44 to €45 billion and the adjusted EBIT margin is anticipated to be in the range of approximately 7.0% to 7.5%.
- Automotive Group sales are now expected to be approximately €26 to €26.5 billion and the adjusted EBIT margin is anticipated to be in the range of approximately 4.2% to 4.8%.
- Rubber Group sales are now expected to be approximately €18 to €18.5 billion and the adjusted EBIT margin is anticipated to be in the range of approximately 12.0% to 12.5%.
- The capital expenditure ratio before financial investments and including IFRS 16 is now expected to be below 8% of sales.
- Free cash flow before acquisitions, including IFRS 16 and excluding carve-out effects is now expected to be in the range of approximately €1.2 to €1.4 billion.
- All other elements of the previous outlook remain unchanged.
Though the decline in the automotive industry also affected Continental’s business in the second quarter of 2019, preliminary key data indicate that the period’s results meet current analyst expectations. Consolidated sales were approximately €11.2 billion and the adjusted EBIT margin was approximately 7.8%. Therein, Automotive Group sales were approximately €6.7 billion and the adjusted EBIT margin was approximately 5.5%, while Rubber Group sales were approximately €4.5 billion and the adjusted EBIT margin was approximately 12.3%.
The financial report for the first half of 2019 will be released on August 7, 2019.
“Adjusted EBIT” is defined in the Glossary of Financial Terms on page 36 of the 2018 Annual Report, which is available at www.continental-ir.com.