DGAP-News: First Quarter of 2020: Continental Increases Cost Discipline
DGAP-News: Continental AG
/ Key word(s): Quarter Results
- Consolidated sales in the first quarter of €9.8 billion; adjusted EBIT margin of 4.4 percent; organic sales decline of 10.9 percent - High liquidity (€6.8 billion) and slightly positive free cash flow before acquisitions and carve-out effects (€59 million) after three months - CEO Dr. Elmar Degenhart: "We will feel the financial impact of the coronavirus pandemic even more strongly in the second quarter." - In view of the current market situation, the company is striving to reduce investments by at least 20 percent in the current fiscal year - Continental expects sales and earnings in 2020 to be significantly below previous year's figures - Executive Board forgoes 10 percent of its fixed income for another three months (until end of July) - Ramp-up: Production still halted temporarily at about one-fifth of all locations - Global protective strategy established to ensure safe production during a pandemic; in-house production of masks planned Hanover, May 7, 2020. Continental's sales and profits declined significantly in the first quarter. The primary reason for this was the production stop in China due to the coronavirus and the resulting impact. In the reporting period, the production of passenger cars and light commercial vehicles in China was down year-on-year by about 50 percent according to current estimates. Markets in Europe (about -20 percent) and North America (about -10 percent ) were also weak. At 17.3 million vehicles, global automotive production was down about 25 percent in the reporting period. In absolute figures, the global decline corresponds to about 5.7 million fewer vehicles produced in comparison to the previous year. As the technology company announced when it presented its key figures for the first quarter on April 27, 2020, sales amounted to €9.8 billion (Q1 2019: €11 billion), or 10.9 percent lower than in the previous year. In organic terms - before changes in the scope of consolidation and exchange-rate effects - sales also decreased by 10.9 percent. Adjusted EBIT fell to €432 million (Q1 2019: €884 million) and was thus about half as high as in the same period of the previous year. The adjusted EBIT margin was 4.4 percent (Q1 2019: 8.1 percent). The second quarter is expected to be the weakest quarter of the current fiscal year for Continental with regards to sales and earnings, as this is when the impact of the coronavirus pandemic will really be felt in Europe and America. "We will feel the financial impact of the coronavirus pandemic even more strongly in the second quarter. Usually, we generate three-quarters of our sales in Europe and North America. But both regions have been hit hard by the effects of the coronavirus pandemic since the end of March, while automotive production in China is stabilizing again," said Continental's CEO Dr. Elmar Degenhart. In view of the current distribution, he underscored Continental's intention to further balance out its revenues and to increase the proportion of its consolidated sales generated in Asia to 30 percent in the medium term. As Continental announced at the end of April, the timing for a more detailed outlook for 2020 currently cannot be determined since the situation remains very dynamic. For the year as a whole, however, the DAX company is expecting sales and earnings to fall significantly short of the previous year's figures. Cost discipline further intensified; positive free cash flow In the reporting period, capital expenditure on property, plant and equipment, and software was down by €167 million at €475 million. The capital expenditure ratio was 4.8 percent (Q1 2019: 5.8 percent). The effectiveness of our cost management was already reflected in the free cash flow before acquisitions and carve-out effects: at €59 million in the first quarter, it substantially exceeded the previous year's figure (-€580 million). "We achieved a positive free cash flow in the first quarter, which serves as proof of our fast and effective crisis management. Due to seasonal effects, free cash flow is usually negative in the first quarter," Schäfer said. The improvement was primarily due to a lower level of cash outflow for working capital, a reduced level of investments and the cash inflow from the sale of the 50-percent stake in SAS Autosystemtechnik GmbH. Capital expenditure on research and development in the first quarter amounted to €913 million. In relation to consolidated sales, the ratio was 9.3 percent. In the same period of the previous year, it was 8.2 percent. The increase is primarily attributable to the lower sales in the first quarter of 2020 as a result of the coronavirus pandemic. Continuing high liquidity after conclusion of the first quarter Consistent continuation of Transformation 2019-2029 structural program Key figures for the Continental Group
1 Capital expenditure on property, plant and equipment, and software. 2 Before changes in the scope of consolidation. 3 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects. 4 Excluding trainees. Production still halted at about one-fifth of all locations worldwide As of the beginning of May, production still remains temporarily halted at one-fifth of Continental's 249 production locations worldwide, primarily at locations in North America, Russia and India. In Germany, production is still on hold only at one location. Due to the temporary production interruption and lower demand, about 60 percent of Continental's nearly 240,000 employees worldwide are currently working reduced hours. In Germany, about 30,000 employees in all company functions worked six days less on average in April as part of the short-time work scheme. Due to the coronavirus pandemic and the ongoing uncertain economic environment, Continental will continue to make use of short-time work here in May. The extent to which short-time work is utilized depends on local conditions. Executive Board forgoes portion of salary for another three months Global protective strategy for production Most employees who do not work in production are working from home wherever feasible in order to minimize personal contact at work. A global strategy ensures employees have sufficient health protection while carrying out certain tasks in all of the company's facilities. Protective masks: own requirements covered by in-house production As at the end of the first quarter of 2020, the Continental Group had 239,649 employees, representing a decline of 1,809 in comparison to the end of 2019. Key figures for the group sectors
1 Capital expenditure on property, plant and equipment, and software. 2 Excluding trainees. 3 Before changes in the scope of consolidation. 4 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects.
1 Capital expenditure on property, plant and equipment, and software. 2 Excluding trainees. 3 Before changes in the scope of consolidation. 4 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects. Sales and earnings development of business areas better than expected at the beginning of April The Rubber Technologies group sector achieved sales of €4.0 billion (Q1 2019: €4.4 billion) and an adjusted EBIT margin of 9.8 percent (Q1 2019: 12.2 percent). Organic sales growth was In Continental's powertrain business, the Powertrain Technologies group sector, sales were €1.8 billion (Q1 2019: €2.0 billion) and the adjusted EBIT margin was 0.7 percent (Q1 2019: 3.9 percent). Organic sales growth came to -9.1 percent. Continental develops pioneering technologies and services for sustainable and connected mobility of people and their goods. Founded in 1871, the technology company offers safe, efficient, intelligent and affordable solutions for vehicles, machines, traffic and transportation. In 2019, Continental generated sales of €44.5 billion and currently employs about 240,000 people in 59 countries and markets. Press contact Vincent Charles
07.05.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | Continental AG |
Vahrenwalder Straße 9 | |
30165 Hannover | |
Germany | |
Phone: | +49 (0)511 938-1068 |
Fax: | +49 (0)511 938-1080 |
E-mail: | [email protected] |
Internet: | www.continental-corporation.com/de |
ISIN: | DE0005439004 |
WKN: | 543900 |
Indices: | DAX |
Listed: | Regulated Market in Frankfurt (Prime Standard), Hamburg, Hanover, Stuttgart; Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Tradegate Exchange; Luxembourg Stock Exchange, SIX |
EQS News ID: | 1038243 |
End of News | DGAP News Service |
|
1038243 07.05.2020
Continental AG Aktie
Ausgeglichene Community-Meinungen bei Continental AG mit einer gleichen Anzahl von Buy- und Sell-Einschätzungen.
Das Community-Kursziel von 66 € für Continental AG deutet auf ein leicht positives Wachstumspotenzial gegenüber 59.78 € hin.