Conti revises outlook down amid high costs, low demand

Hanover, Germany – Continental AG has revised down its financial outlook for the year due mainly to lower sales, higher costs and warranty claims.

The company has adjusted overall group sales guidance from €46 billion to €45 billion, due to negative exchange rate effects and lower demand, a 22 Aug press release said.

Lower-than-expected demand in original equipment, particularly in Europe and China within the automotive and ContiTech divisions have contributed to the lower sales guidance.

Additionally, weak demand in the tire markets in both regions has led to lower sales expectations.

The company also noted high development costs within the Automotive Group, due to high order intake of €20 billion in the first half of the year.

Start-up costs in the ContiTech division and transition to products systems for hybrid and electric vehicles in the powertrain sector also contributed to higher costs.

Conti said it has responded to the issue by “initiating measures to cut production costs”, while adapting its planned investments to lower sale expectation.

The Hanover technology and automotive group has also revised down its adjusted EBIT margin to more than 9% from the previously stated figure of more than 10%.

Sales in the rubber group have been adjusted to €17.5 billion from €18.5 billion. This includes a negative exchange-rate effects of about €500 million. Adjusted EBIT margin of the Rubber Group has been revised down to more than 13% compared to more than 14%.