Continental bets on higher pricing as tyre replacement flat

BERLIN (Reuters) -Continental lowered its sales outlook for its tyres segment on Wednesday but kept its margin outlook unchanged as higher pricing and a focus on premium products bolstered revenue in the second quarter.

The autos supplier expects sales of 14-15 billion euros ($31.82 billion) in the tyres segment from 14.5-15.5 billion previously, citing a declining market for tyre replacement in Europe and North America.

But the rise in costs on wages, salaries, logistics, energy and materials would be lower than previously forecast at 1.4 billion euros from 1.7 billion.

It was negotiating inflation-related price increases with customers for the second quarter, it added.

Continental needed to “make up considerable ground” in its automotive segment, it said, which fell short of expectations in the second quarter partly because of currency exchange effects and freight costs.

It confirmed its lower than expected adjusted earnings margin 4.8% on sales of 10.4 billion euros, as reported in preliminary results in July.

The automotive segment saw a loss on its earnings margin of 0.6%, below the consensus of a 1% rise, despite meeting expectations for sales at 5.1 billion euros.

The company said it expects passenger car and light commercial vehicle production to rise 3-5% this year from a previous forecast of a 2-4% rise, but expects the global tyre replacement business to remain unchanged or decline by up to 2%.

Preliminary figures showed global passenger car and light commercial vehicle production grew by around 16% in the second quarter compared to last year, it added.

($1 = 0.9115 euros)