Conti tires earnings drop amid replacement volume decline

Hanover, Germany – Continental AG’s Tires Group has seen a decline in first quarter adjusted earnings (EBIT) despite higher sales.

The business group posted adjusted earnings of €469 million for the three months to end of March, down 20% compared to €565 million reported in 2022. The unit’s earnings margin fell from 17.1% in 2022 to 13.5% this year.

Sales within the segment rose nearly 5% to €3.46 billion, despite an 8.6% decline in replacement volumes, Continental reported 10 May.

The German group linked the improved sales to a 13.5% effect of price/mix and a slight positive impact of the foreign exchange effect.

As for earnings, the group said increased inflation for labour, logistics and energy costs had an €85 million negative impact on results.

While raw material headwinds continued in the first quarter, Continental also noted that 2022 figures had been “significantly impacted by inventory valuation”.

Continental’s industrial and materials arm, ContiTech, meanwhile delivered a strong 31% increase in adjusted earnings to €109 million, on 10% higher sales of €1.73 billion.

In particular, Continental linked the improved earnings to the “stabilisation of production processes” and price adjustments due to inflation.

Continental noted positive volume development in the OE business while delivery to industries declined slightly.

Pricing also more than offset the €75 million negative effect of labour, logistics and energy costs.

From May, ContiTech will also be strategically realigned with the aim of enhancing its impact and efficiency, and improving customer and market proximity.

The business group will “step up its focus on expanding its industrial business”, according to Continental.

The realignment will develop ContiTech “from a conventional product supplier to a provider of integrated solutions,” the Hanover-based group added.