DGAP-News: Continental Delivers Solid Operational Performance in Weak Market Environment
DGAP-News: Continental AG
/ Key word(s): 9 Month figures
- Sales up 3 percent in the third quarter to EUR11.1 billion (down 0.3 percent organically) Hanover, November 12, 2019. Continental delivered a solid operational performance in the third quarter of 2019 despite markets continuing to decline. As the technology company stated today at the presentation of its quarterly figures in Hanover, reported sales rose in the third quarter by nearly 3 percent to EUR11.1 billion. In the same period of the previous year, they totaled EUR10.8 billion. Adjusted for changes in the scope of consolidation and exchange rates, sales growth was down 0.3 percent, nearly on par with the prior-year level. By contrast, global production of passenger cars and light commercial vehicles fell by about 3 percent in the same period. Thanks to its forward-looking product portfolio, the technology company was thus able to almost entirely escape the effects of the sharp decline in demand worldwide. The adjusted operating result (adjusted EBIT) was EUR615 million (margin: 5.6 percent). "Thanks to the global demand for our systems and solutions, we were able to keep our sales at a stable level in the third quarter despite the continuing decline in the market environment. The current situation requires us to enhance our long-term competitiveness. With our global Transformation 2019-2029 structural program we are taking the necessary steps to achieve this. It is a challenging but essential process to ensure our viability. We are thus responding proactively to the crisis in the automotive industry and, like 10 years ago, we will emerge stronger," said Dr. Elmar Degenhart, CEO of Continental. Degenhart also confirmed the annual targets for the current fiscal year, which had been adjusted in July 2019. "We are maintaining our outlook for the current fiscal year. We anticipate that full-year sales will be about EUR44 to EUR45 billion and the adjusted EBIT margin will be about 7 to 7.5 percent." Strategy 2030: focus on five core areas for future growth Continental supplies electronic architecture for highly connected Volkswagen ID. Further information on the specified measures is available in a separate press release published today by the Interior division. Vitesco Technologies starts production of fully integrated e-drive system "Vitesco Technologies has the potential to assume a leading role for drive systems technologies in the dynamic market environment," said Andreas Wolf, CEO of Vitesco Technologies. This is reflected by the fact that two leading automotive manufacturers recently opted for the innovative electric axle drive technology from Vitesco Technologies. The innovative axle drive system will be used in the future in vehicles such as the small Peugeot e-208 and Opel Corsa-e electric cars, as well as the Hyundai Encino SUV and the Hyundai Lafesta sedan. Based on its strong expertise in the area of electronics, sensors and actuators, Vitesco Technologies is one of the few system providers for high-voltage components and hybridization solutions. One-time effects impact quarterly and annual results The adjusted EBIT of EUR615 million for the third quarter was above the reported EBIT of -EUR1.97 billion. The negative difference was EUR2.585 billion. Net income attributable to the shareholders of the parent also fell to -EUR1.99 billion. In the prior-year period it was EUR626 million. Factors here were the impairment on intangible assets and provisions announced on October 22, 2019, for the current structural program, which had a negative impact on the reported EBIT and on net income. "The impairment is a non-cash write-down of goodwill from acquisitions that we had to take due to our adjusted market outlook," said Continental's CFO Wolfgang Schäfer. Schäfer also noted Continental's solid performance in the third quarter: "If you look at our purely operational performance, we did reasonably well in the third quarter." Sideways trend in car production expected at best in 2020 "We, like other market participants, do not expect a material improvement in global production in the next five years," he added. Looking ahead to next year, Schäfer said: "At best, we foresee a sideways trend in global automotive production in 2020." He noted, however, that a decline in global production of passenger cars and light commercial vehicles for a third year in succession remains a distinct possibility. In the third quarter, the production of passenger cars and light commercial vehicles in China was down by more than 5 percent year-on-year, whereas it was nearly on par with the prior-year figures in Europe and North America. The company, however, anticipates that production rates will continue to decline in the fourth quarter in these three key regions. For the year as a whole, Continental expects the decline in the global production of passenger cars and light commercial vehicles to be about 6 percent year-on-year.
1 Before changes in the scope of consolidation. 3 Capital expenditure on property, plant and equipment, and software. 4 Excluding trainees. IFRS 16, Leases, was adopted on and has been applied since January 1, 2019. It is applied using the modified retrospective approach, under which the previous year's figures are not adjusted. As a result, some of the figures above are not comparable with the prior-year period.
Despite the decline in global automotive production, the Automotive Group increased its sales by 2.2 percent year-on-year in the third quarter. Business performance was stable in organic terms. Sales during this period totaled about EUR6.6 billion. The adjusted operating margin was 1.6 percent (previous year: 4.0 percent). This includes the provisions announced in July 2019 for warranty claims in the amount of EUR187 million, which were incurred primarily by the Powertrain division.
1 Excluding trainees. 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. IFRS 16, Leases, was adopted on and has been applied since January 1, 2019. It is applied using the modified retrospective approach, under which the previous year's figures are not adjusted. As a result, some of the figures above are not comparable with the prior-year period.
With regard to the stable trend for the Rubber Group in the third quarter, Schäfer commented: "We have been focusing for a long time on boosting our industrial and end-customer business. This makes us more independent from the trends on the international automotive markets. A prime example is the acquisition of the Merlett Group, a thermoplastics specialist based in Italy, which we completed at the beginning of November." With this acquisition, Continental is expanding the materials expertise of its industrial hose business in the ContiTech division, its industrial specialist. The aim is to offer increasingly intelligent applications with the aid of thermoplastic materials in the future, for example by means of sensors. In the first nine months of the year, Continental's capital expenditure on property, plant and equipment, and software totaled EUR2.2 billion. This put the capital expenditure ratio at 6.6 percent (previous year: 5.9 percent). The technology company's net expenditure for research and development was about EUR2.7 billion, corresponding to 8.0 percent of consolidated sales. The figure for the same period of the previous year was 7.6 percent. As at September 30, 2019, net indebtedness was about EUR5.5 billion. This represents a decline of about EUR200 million compared to the end of the second quarter of 2019, when it totaled around EUR5.7 billion. The gearing ratio, which quantifies the degree of indebtedness, was 34.3 percent on the reporting date. Continental's liquidity reserves amounted to about EUR5.3 billion on the reporting date of the period under review. As at the end of the third quarter of 2019, Continental had 242,516 employees, representing a decline of 710 in comparison to the end of 2018. Adjustments were made primarily in the Automotive Group in response to lower global vehicle production. This was countered by the acquisitions of antenna specialist Kathrein Automotive and anti-vibration specialist Cooper-Standard. 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 2018, Continental generated sales of EUR44.4 billion and currently employs more than 240,000 people in 60 countries and markets. Press contact Vincent Charles
12.11.2019 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: | 910319 |
End of News | DGAP News Service |
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910319 12.11.2019
Continental AG Stock
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