Auto supplier – Continental creates fewer profits – economy

At the third largest German automotive supplier Continental, operating profit fell by a fifth in the second quarter. With adjusted earnings before taxes and interest of around 414 million euros, the Hanover-based group did better than analysts had feared. At 9.4 billion euros, sales were 13 percent above the previous year’s level if you exclude the Vitesco gearbox division, which was floated on the stock exchange in autumn, as the company announced. Analysts had given Conti an average of only 9.2 billion euros. At the same time, the automotive supplier is burdened by special effects that add up to more than half a billion euros. The Conti share price gains of up to three percent in view of the higher-than-expected figures quickly disappeared again.

The biggest chunk that Continental has to cope with is depreciation of 370 million euros on goodwill and property, plant and equipment. The reason for this is the rising interest rates, which increased the discount factor for future earnings. The additional sanctions against Russia and the clouded prospects for the tire division there are reflected in write-downs of 75 million euros. Continental continues to produce tires in Kaluga, Russia. Recently, however, the group had considered a complete withdrawal from the country. The conversion of hose production (Mobile Fluid Systems) in Germany will cost 63 million euros. According to earlier information, 870 jobs will be affected by the closure of some locations.

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