Automotive industry Continental increases profit through higher prices
Despite the challenges in the automotive industry, Continental was able to significantly increase its profits thanks to price increases.
11.11.2024, 14:42
SDA
Continental has recorded a remarkable increase in profits in the midst of the crisis in the automotive industry. In the third quarter, net profit rose to 486 million euros, an increase of almost 63 percent compared to the previous year, despite a slight decline in sales.
The Group made significant progress in both the automotive supply and tire divisions. This was primarily due to the successful price increases that Continental was able to implement with car manufacturers.
"We closed the third quarter with a good result," explained CFO Olaf Schick. Total sales fell by four percent year-on-year to 9.83 billion euros. For the year as a whole, the management expects sales of between 39.5 billion and 42 billion euros, which is 500 million euros less than previously forecast.
Higher prices and job cuts support automotive supplier division
The automotive supplier division, which had been weakening recently, benefited from the price increases. According to Olaf Schick, 90 percent of the planned price negotiations were successfully concluded this year, with the focus on compensating for inflation.
Whether this also applies to the important customer VW remained unclear. VW has recently tightened its savings course and is planning savings in procurement.
Continental was also able to achieve savings through cost reductions as a result of job cuts in car supply. This year, 100 million euros have already been saved, and by the end of the year it is expected to be around 200 million euros. Of the 7150 jobs to be cut in the division worldwide, more than 4500 have already been eliminated, mainly in Germany.
Tire division benefits from winter tire business
Car supply remains a challenge for the Group. CEO Nikolai Setzer is planning a spin-off of the division on the stock exchange, and the reviews are underway. "However, we are making good progress," says Schick. The analysis should be completed by the end of the year.
The tire business, on the other hand, developed positively, particularly due to the good start to the winter tire business. Continental plans to retain the tire division even after a possible spin-off of the automotive division. In contrast, the plastics technology division Contitech is suffering from weak demand from industry. Here, too, parts associated with the automotive industry are under review.
