Conti trims tire sales forecast after mixed first half showing

Hanover, Germany – Continental is trimming its full-year sales forecast but sticking with earnings guidance for its Tires business, after mixed signs from the global market over the first six months of 2023.  

For the first half, the group's Tires unit posted a 14.0% year-on-year drop in earnings (EBITDA) to €1,236.0 million on sales 3.7% higher at €6,921.7 million.

The performance included a 14.2% year-on-year decline in EBITDA to €576.2 million during the second quarter, with sales down 2.3% to €3,459.2 million.

Continental also provided earnings figures based on ‘adjusted EBIT’, which for the Tires unit fell 8.4% year-on-year to €942.9 million in the first half of 2023.

“Despite difficult market conditions, our Tires group sector ended the second quarter with good earnings once again,” Continental CEO Nikolai Setzer said in a 9 Aug results statement.

Increased tire revenues over the first six months were linked to positive price and product-mix effects, reflecting a "stable price situation" and a high proportion of premium-tire sales. 

Commenting further on its first half showing, Continental said OE tire sales increased “considerably” compared to the prior-year period due to a rise in vehicle production.

This, it said, included 15% year-on-year rises in vehicle production in April, May and June, in Europe and North America – to around 4.4 million and 4.1 million units respectively – and a 20% rise in China to around 6.6 million units.

Against this, replacement sales in the passenger car tire business, particularly in Europe and North America, were down year-on-year.

Replacement sales were hit by “consistently high inventories in the trade and the price reduction anticipated on the market,” explained Continental.

In the commercial vehicle tire business, sale figures were “considerably lower” than in the prior-year first half, the Hanover-based group also reported.

Looking ahead, Continental has “adjusted its outlook for the current fiscal year due to the declining European and North American markets in the tire-replacement business.”

Continental said it expects production of passenger cars and light commercial vehicles to increase by 3-5% year-on-year, up from its previous forecast of 2- 4%.

However, full-year replacement sales volumes look set to develop by between minus 2% and 0%, compared to a previously forecast increase of 1-3%.

Continental, therefore, forecast its Tires business to achieve sales of between around €14.0 billion and €15.0 billion – previously €14.5 billion and €15.5 billion – with its adjusted EBIT margin guidance unchanged at around 12-13%.

This earnings projection includes an expected negative impact from higher costs for material, wages & salaries of around €200 million.

The forecast indicates an improved outlook on cost-increases: previously pegged at “€400 million for wages & salaries as well as energy and logistics”.