Economic news

Continental promises stronger second half as cost-cutting measures sink in

2024.08.07 08:24

By Victoria Waldersee and Andrey Sychev

BERLIN (Reuters) -Continental delivered better-than-expected results on Wednesday and said the second half of the year would be even stronger as cost-cutting and restructuring measures underway at the German car parts supplier began to pay off.

The company lowered its sales outlook to 40 billion to 42 billion euros ($45.87 billion) and said it expected to land at the lower end of that corridor but anticipated stronger margins in the quarters ahead because of planned costs cuts of around 100 million euros.

Still, executives warned investors of slower demand weighing on sales prospects, with Chief Financial Officer Olaf Schick describing the weak market in Europe as “a bit dramatic” and saying China was growing slower than previously thought.

The company was looking to boost the proportion of its sales in China to local Chinese customers, executives said, in line with a wider industry trend of fencing off business in the country to shield against possible trade barriers.

“PROMISING EARLY SIGNS”

The company’s profit margins improved across all divisions, with adjusted earnings before interest and taxes up 40.6% from last year to 704 million euros ($768.35 million).

Still, Continental lowered its sales outlook and cut its margin forecast in the automotive sector to 2.5-3.5% from 3-4% previously, citing weak demand in Europe.

Analysts at Citi said the improvement in the second quarter was “positive” and that the adjusted 2024 outlook was “not as bad as feared”.

“This could underpin promising early signs on 2025,” Citi said, pointing to further cost-cutting measures expected next year.

The shares were up 5.3% from Tuesday’s close, topping Germany’s blue-chip .

“RAYS OF HOPE”

The car parts supplier has been fighting to keep costs in check and restructure in the face of a tumbling market capitalisation and weak auto demand. Its share price has halved since June 2021, taking its market value to 11.3 billion euros.

Wednesday’s results were a “mix of some rays of hope”, analysts at Bernstein Research said, pointing to high order intake in the automotive division.

On Monday, Continental said it was considering a spin-off and subsequent listing of its automotive unit on the Frankfurt stock exchange, with an executive board decision expected in the fourth quarter.

The move would effectively halve Continental’s revenue and carve out the automotive part of its tyre and plastics business ContiTech.

For months, the company has hinted at major changes in the division, whose portfolio ranges from brakes to sensors and assistance systems, after struggling for several years with low profitability.

© Reuters. FILE PHOTO: A sticker with the logo of German tyre company Continental is pictured on tyres in Bourbriac, France, February 18, 2022. REUTERS/Benoit Tessier/File Photo

However, CEO Nikolai Setzer had said at a capital markets day in December that the automotive business would stay within the company, and that only the user experience unit was being made independent.

($1 = 0.9166 euros)



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 82,932.22 0.38%
ethereum
Ethereum (ETH) $ 1,935.28 1.51%
tether
Tether (USDT) $ 1.00 0.00%
xrp
XRP (XRP) $ 2.29 0.35%
bnb
BNB (BNB) $ 616.73 1.60%
solana
Solana (SOL) $ 125.08 0.36%
usd-coin
USDC (USDC) $ 1.00 0.00%
cardano
Cardano (ADA) $ 0.706768 0.00%
dogecoin
Dogecoin (DOGE) $ 0.168692 0.29%
tron
TRON (TRX) $ 0.241059 8.56%
staked-ether
Lido Staked Ether (STETH) $ 1,935.18 1.64%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 82,730.17 0.40%
leo-token
LEO Token (LEO) $ 9.78 0.04%
chainlink
Chainlink (LINK) $ 13.92 0.31%
the-open-network
Toncoin (TON) $ 3.55 2.99%
stellar
Stellar (XLM) $ 0.278214 3.64%
usds
USDS (USDS) $ 1.00 0.03%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,313.33 1.34%
pi-network
Pi Network (PI) $ 1.16 8.50%
hedera-hashgraph
Hedera (HBAR) $ 0.187448 0.27%
avalanche-2
Avalanche (AVAX) $ 19.10 2.38%
shiba-inu
Shiba Inu (SHIB) $ 0.000013 1.25%
sui
Sui (SUI) $ 2.31 1.87%
mantra-dao
MANTRA (OM) $ 7.04 0.84%
polkadot
Polkadot (DOT) $ 4.49 4.62%
litecoin
Litecoin (LTC) $ 90.43 0.33%
bitcoin-cash
Bitcoin Cash (BCH) $ 334.37 0.03%
bitget-token
Bitget Token (BGB) $ 4.59 3.55%
ethena-usde
Ethena USDe (USDE) $ 0.999644 0.03%
weth
WETH (WETH) $ 1,933.81 1.40%
binance-bridged-usdt-bnb-smart-chain
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 0.997417 0.32%
hyperliquid
Hyperliquid (HYPE) $ 13.97 6.87%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,055.11 1.49%
whitebit
WhiteBIT Coin (WBT) $ 28.14 1.00%
uniswap
Uniswap (UNI) $ 6.40 3.31%
monero
Monero (XMR) $ 207.17 0.93%
susds
sUSDS (SUSDS) $ 1.04 0.14%
aptos
Aptos (APT) $ 5.45 3.63%
dai
Dai (DAI) $ 1.00 0.06%
okb
OKB (OKB) $ 52.84 2.26%
near
NEAR Protocol (NEAR) $ 2.59 0.25%
pepe
Pepe (PEPE) $ 0.000007 0.32%
internet-computer
Internet Computer (ICP) $ 5.84 0.12%
ethereum-classic
Ethereum Classic (ETC) $ 18.05 2.68%
mantle
Mantle (MNT) $ 0.808029 1.80%
gatechain-token
Gate (GT) $ 22.04 0.77%
ondo-finance
Ondo (ONDO) $ 0.840287 0.05%
aave
Aave (AAVE) $ 172.03 0.32%
coinbase-wrapped-btc
Coinbase Wrapped BTC (CBBTC) $ 82,942.22 0.35%
tokenize-xchange
Tokenize Xchange (TKX) $ 31.12 5.40%