Supplier giant Continental: Sales and profit warning!

In recent days and weeks we have already reported massive negative data from German industry. Clearly (!) declining orders and sales. In addition there were sales and profit warnings from giants such as BASF and Daimler. And now what? Overnight Continental, one of the German giants among the automotive suppliers, joined us with a clear sales and profit warning. According to Continental, expectations for corporate sales in 2019 now amount to around 44 to 45 billion euros. The adjusted EBIT margin is expected to be around 7 to 7.5 percent (previously: sales: around 45 to 47 billion euros, adjusted EBIT margin: around 8 to 9 percent). This means that the mood at the start of trading in the Dax is likely to be pessimistic. How strongly this announcement at 9 a.m. at the start of trading will really affect the market as a whole is still difficult to predict before. But in any case it has a massive impact on the mood, because it also has an effect on Daimler, Volkswagen and BMW. Quote from Continental:

The technology company Continental is adjusting its outlook for fiscal 2019. The main reason for this is the continued decline in worldwide production of passenger cars and light commercial vehicles. Continental had previously expected global automobile production in 2019 to be at the previous year’s level. According to the latest developments in global automobile production, the DAX company now expects a decline of around 5 percent for the year as a whole. In addition, there are indications of unexpected changes in customer demand behavior in the second half of the year as well as possible provisions for warranty claims in the Automotive Group. The reasons for these potential warranty costs and thus their specific amounts have not yet been clarified at this time. The sales forecast adjusted for the aforementioned reasons on the basis of a stable development of exchange rates compared with the first half of 2019 now corresponds to around 44 to 45 billion euros. Accordingly, the adjusted EBIT margin for the full year is expected to be around 7 to 7.5 percent.

“Our second quarter was solid despite a further decline in the business environment. We are now less optimistic than before about the second half of the year. The reason for this is the ongoing downward trend in automobile production in Europe, North America and China in particular. The continuing unresolved trade conflicts are also contributing to economic uncertainty. We are therefore adjusting our outlook for the full year,” said Continental CFO Wolfgang Schäfer.

Photo: Continental AG

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