Continental beats Q2 operating profit view on resilient tyre demand
Continental Outperforms Expectations in Q2 2023
Strong Tyre Demand and Financial Results
Aug 4 (Reuters) - German car parts supplier Continental beat market expectations for its second-quarter operating profit on Tuesday, as resilient tyre demand and a lower impact from currency exchange and tariffs helped counter the effects of persistently weak global automotive production and replacement-tyre markets in North America.
Continental, which is in the process of shedding non-core businesses to become a pure-play tyremaker, reported adjusted earnings before interest and taxes of €570 million ($656 million), compared with €422 million in the same quarter last year.
A company-provided analyst consensus was expecting €539.4 million on average.
Key Drivers Behind Profit Growth
"The main drivers ... were a higher share of tyres measuring 18 inches and above, lower impacts from exchange rates and tariffs, and positive effects from raw-material prices," Chief Financial Officer Roland Welzbacher said.
Future Outlook and Cost Challenges
"For the second half of the year, however, we expect raw-material costs to increase substantially and have already taken steps to address this,” he added.
Strategic Realignment and Sales Guidance
Continental has gone through a major strategic realignment to shed its non-tyre assets and focus on its most profitable business.
Divestment and Financial Projections
Following the agreed sale of its rubber and plastic division Contitech, the Hanover-based company expects full-year sales of around €13.2 billion to €14.2 billion and an adjusted operating margin of around 12% to 13.5%.
It had previously guided for sales of €17.3 billion to €18.9 billion and an adjusted operating margin of 11% to 12.5%.
Currency Exchange Rate
($1 = 0.8690 euros)
Reporting Credits
(Reporting by Emanuele Berro and Simon Ferdinand Eibach in Gdansk, editing by Milla Nissi-Prussak)
