Conti posts diverging results for ContiTech, Tires units

Hanover, Germany – Continental AG’s Tire group sector has finished 2022 on a strong note, with an 18.6% year-on-year rise in sales, to €14 billion, and earnings (EBITDA) 5% higher at €2.6 billion.

By contrast, industrial rubber arm ContiTech reported a 42% decline in earnings to €486 million on 11.5% higher sales of €6.6 billion, Continental’s full year results published 8 March also show.

Business performance across both rubber-focused sectors was significantly impacted by price rises for important raw materials and high energy and logistics costs.

Prices for butadiene and input products based on crude oil were particularly affected, the group noting a €2.3-billion cost headwind for the two business units combined.

In the tires business, however, Continental said that earnings were propped up worldwide by price adjustments as well as higher sales volumes of larger and high-margin tires in 2022.

“Given the adverse market conditions, this was a very good performance,” the group remarked.

In the ContiTech group sector, price increases for automotive OE and in the industrial and replacement business were the main contributors to the uptick in sales.

Furthermore, demand for conveyor belts and air spring systems for commercial vehicles was “brisk”, Continental added.

However, earnings within non-tire segment were hit by “higher production costs, the unfavourable sales development of products with lower profitability, and pandemic-related business restrictions in China.”

Looking ahead, Continental expects global production of passenger cars and light commercial vehicles to increase by between 2% and 4% in 2023.

That represents a significant step-down from 2022, when output increased by around 7% to 82 million vehicles.

The Hanover-based group also foresees “significantly higher costs for materials, wages and salaries as well as energy and logistics” – amounting to around €1.7 billion for the year.

Based on these assumptions and given the exchange rates at the beginning of the fiscal year, Continental anticipates the Tires group sector, to register sales of about €14.5-15.5 billion. Adjusted EBIT margin is expected to come in around 12% to 13%, on a par with 2022.

ContiTech is expected to achieve sales of €6.8-7.2 billion and an adjusted EBIT margin of around 6% to 7%, up from 4.7% reported for 2022.