Continental sees at least 100-million-euro hit from Iran war, tyre margins at risk
Continental Faces Financial Impact Amid Global Uncertainties
By Emanuele Berro and Simon Ferdinand Eibach
May 6 (Reuters) - Continental expects a hit of at least 100 million euros ($117 million) from the Iran war from the second quarter, the German car parts supplier said on Wednesday, as surging oil prices push up the cost of raw materials key to tyre production.
Industry-Wide Challenges Intensify
The war and resulting surge in oil prices have added to uncertainty across global industries, including for auto parts makers in Europe already grappling with U.S. tariffs, weaker demand, Chinese rivalry and supply chain disruptions.
Impact on Tyre Business and Raw Material Costs
Continental said it expected a hit in the "low-to-mid-triple digit million euro range" for its tyres business, with higher raw materials prices set to kick in from April.
First-Quarter Performance and Market Reaction
Still, Continental shares surged over 7% in morning trading -- the biggest percentage gainer on the DAX index -- as its first-quarter profit beat expectations. Analysts at Jefferies and JP Morgan said the quarter benefited from cost cuts, lower raw material prices and a focus on high-margin tyres.
Stockpiling Strategy
STOCKPILING MAY HELP OFFSET HIGHER PRICES
To offset the higher prices, Continental said it would focus on building stockpiles for critical raw materials.
Tariffs and Strategic Realignment
U.S. Import Tariffs and Financial Impact
In terms of U.S. import tariffs, finance chief Roland Welzbacher told Reuters the group expects an impact in the "mid to high double-digit million euro" range, should higher levies recently announced by President Donald Trump apply to tyres.
Business Realignment and Asset Sales
Continental is strategically realigning its business to shed non-tyre assets, with Welzbacher saying its rubber and plastic division ContiTech was expected to be sold by the end of 2026.
Bloomberg reported that private equity firms, including Apollo Global Management and Bain Capital, were weighing bids for ContiTech.
Financial Results
Adjusted pretax earnings were 522 million euros ($612.51 million), up 6.1% from a year ago, beating the 499.5 million euro analyst consensus provided by the company.
($1 = 0.8522 euros)
(Reporting by Emanuele Berro and Simon Ferdinand Eibach in Gdansk; editing by Christoph Steitz and Bernadette Baum)
