Continental AG has lowered its profit forecast amidst a worsening economic environment.

The company said it now expects its margin on earnings before interest and tax (EBIT) to be about 8.5% in 2008, rather than the 9.3% that it had originally targeted.

The company has blamed a worsening outlook in the vehicle markets of North America and western Europe in the third quarter and on-going high raw material costs. The company said rubber divisions were not affected as badly as the automotive divisions.

A detailed statement for the first nine months of trading will be released at the end of October.

Continental has recently been the subject of a hostile takeover bid from Schaeffler. Schaeffler now owns 48.32% of the company but has pledged not to own more than 49.99% of shares before 2012 in order to win approval from the company for the takeover. The two companies would overtake Bosch to become the world's largest automotive supplier.