German technology major Continental has announced its financial result for Q3 calendar year 2023. The company reported consolidated sales of 10.2 billion euros (Q3 2022: 10.4 billion euros, -1.5 percent). Its adjusted operating result was 637 million euros (Q3 2022: 595 million euros, +7.1 percent), corresponding to an adjusted EBIT margin of 6.2 percent (Q3 2022: 5.7 percent).
The net income in the third quarter increased to 299 million euros (Q3 2022: 211 million euros).
The German company says it was able to significantly improve the operating result in its Automotive group sector compared with the first half of the year. This was thanks to price adjustments, high-cost discipline and stabilised supply chains. Furthermore, it increased its adjusted free cash flow year-on-year as well as compared with the first two quarters of 2023. This was due primarily to a reduction in inventories. The company has adjusted its sales outlook for the Automotive group sector – mainly because of ongoing negative exchange-rate effects – and its outlook for consolidated sales. It has also slightly raised its adjusted EBIT margin outlook for tyres due to the group sector’s good earnings.
“We ended the third quarter in line with our expectations. Our earnings were good in Tires and stable in ContiTech, and we made progress in Automotive, significantly increasing its earnings compared with the first half of the year. We will build on this in the fourth quarter and continue to improve,” said Nikolai Setzer, CEO, Continental.
Katja Garcia Vila, CFO, Continental said, “We have also made progress in terms of adjusted free cash flow. But, as in the previous year, we still have significant ground to gain in the fourth quarter. Our focus is on increasing our earnings and further reducing inventories and receivables in order to achieve an adjusted free cash flow of around 0.8 billion euros to 1.2 billion euros by the end of the year.”
The company found that according to preliminary figures, the global production of passenger cars and light commercial vehicles amounted to around 22.3 million units in the third quarter of 2023. This was around the same level as the previous quarter (Q2 2023: 22.2 million units) and around 4 percent higher year-on-year (Q3 2022: 21.5 million units).
Outlook
For 2023, Continental expects production of passenger cars and light commercial vehicles to increase by 5 to 7 percent year-on-year (previously: 3 to 5 percent). For the global tyre-replacement business, the technology company expects sales volumes to develop by -2 to 0 percent.
Continental has adjusted its sales outlook for the Automotive group sector, mainly because of ongoing negative exchange-rate effects. Continental now expects sales in the Automotive group sector of around 20 billion euros to 21 billion euros (previously: 20.5 billion euros to 21.5 billion euros) and consolidated sales of around 41 billion euros to 43 billion euros (previously: 41.5 billion euros to 44.5 billion euros).
Furthermore, the Tires group sector performed well, despite declining European and North American markets in the tyre-replacement business. Continental has therefore slightly raised its adjusted EBIT margin outlook for this group sector. For Tires, it now expects an adjusted EBIT margin of around 12.5 to 13.5 percent (previously: 12 to 13 percent).
