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November 11, 2015

Continental Q3 earnings lower than expected

Although Continental has posted third quarter net income up 28%, the results came in under analyst expectations on slower growth in China and ahead of the crucial winter tyre season.

Although Continental has posted third quarter net income up 28%, the results came in under analyst expectations on slower growth in China and ahead of the crucial winter tyre season.

Adjusted earnings before interest and tax (EBIT) rose 11% to EUR1.08bn boosted by higher car markets in Europe and North America but analysts expected to see a stronger performance in the tyres division.

The company confirmed its sales forecast for 2015 and raised the annual forecast again when it released the business figures for the first nine months of the year.

“For the year as a whole, we still anticipate sales of more than EUR39bn. The outlook for the end of the year makes us optimistic about achieving an adjusted EBIT margin of more than 11 percent, after we had previously anticipated around 11 percent. Based on the positive business performance, we are also raising our outlook for free cash flow before acquisitions from its previous level of at least EUR1.8bn to more than EUR2bn,” said the chairman of Continental’s Executive Board, Dr. Elmar Degenhart.

“Overall, we can look back at a solid third quarter in a difficult environment. We compensated for both the slower growth in passenger-car production in China and the decline in industrial business with steady growth in Europe and North America,” said Degenhart. The automotive supplier is also benefiting from a rising proportion of vehicles being equipped with state-of-the-art electronics, it said.

Sales rose by 14.2% year-on-year to EUR29.2bn in the first three quarters of 2015. However, before changes in the scope of consolidation and exchange rate effects, sales rose by just 3.3%.

In the first three quarters, net income attributable to the shareholders of the parent grew by 15.9% to EUR2.1bn.

Workforce grows

Conti said that at the end of the third quarter of 2015, the corporation had over 208,000 employees, roughly 19,000 more than at the end of 2014. The number of employees in the Automotive Group rose by more than 6,300 as a result of increased production volumes and the acquisition of Elektrobit Automotive.

In the first nine months of this year, the Automotive Group generated sales of EUR17.6bn. At 8.8%, the adjusted EBIT margin was higher than the previous year’s level of 8.0%.

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