Auto industry: Continental in the red - hope for the second half of the year

Auto parts and tire maker Continental continues to struggle and slipped into the red in the second quarter.

Auto industry: Continental in the red - hope for the second half of the year

Auto parts and tire maker Continental continues to struggle and slipped into the red in the second quarter. "The current headwind is hurricane-like," said CFO Katja Dürrfeld. "On the other hand, we are confident for the second half of the year," she added. Thanks to a high order intake in the automotive supply business, the financial targets should continue to exist.

In the second quarter, the largest part of the Hanoverian business in terms of sales was in the red, as it was at the beginning of the year. But Conti sees an upward trend again. Most recently, the corona lockdowns in China, the lack of materials, especially for electronic parts, and also Russia's war against Ukraine weighed on the numbers - Conti is groaning under the increasing costs for purchasing, freight and energy.

Hope thanks to full order books

But: In the second quarter, orders for more than 6 billion euros were received in the automotive supply sector. Thanks to a better supply situation for chips, car manufacturers are also expecting more stable production capacity utilization.

The people of Lower Saxony are expecting a further increase in global vehicle production of passenger cars and light commercial vehicles of between 4 and 6 percent this year. In the second quarter, it fell by 5 percent in Europe and by 6 percent in the important Chinese market. In North America, on the other hand, there was a strong increase of 12 percent. Conti depends directly on the numbers when it comes to the original equipment of cars - the manufacturers don't build cars, they don't call for parts either. In order to prepare for the expected increase in production in the second half of the year, Conti also stocked many parts.

As already known, the group's sales from continuing operations in the months of April to June increased by 13 percent to 9.4 billion euros. Growth would have been 8 percent without exchange rate effects and the acquisition and sale of parts of the company. A year ago, the shortage of chips in the industry had noticeably restricted business. In the tire division in particular, this time price increases pushed things forward, but Conti also agreed higher prices with customers in the car business.

Although the lucrative tire business was once again able to offer high profitability, the bottom line was that the Dax group made a loss of 250.7 million euros. A year ago, the group reported a profit of 545.3 million euros.

Group earnings before interest and taxes, adjusted for special effects, fell by around a fifth to EUR 410.5 million due to the difficult situation on the markets. However, there were still book value write-downs in the automotive supply business amounting to 370 million euros due to higher interest rates. Additional sanctions against Russia cost value adjustments of 75 million euros because of the business there. Conversion costs in the plastics technology division Contitech weighed in at a further 63 million euros.

Conti operates a tire plant in Russia and has resumed production after an initial hiatus. However, the management is considering a complete withdrawal from the country. In total, the Dax group employs around 1,300 people in Russia.