Auto supplier: Continental sees burdens in 2022

Auto supplier
Continental sees burdens in 2022

There are construction fences at the new headquarters of the automotive supplier Continental in Hanover. Photo: Julian Stratenschulte / dpa

© dpa-infocom GmbH

The growing importance of electronics in cars is both a blessing and a curse for Conti as a supplier.

After the difficulties in the past quarter, Continental expects problems for the whole of the coming year due to the supply crisis for microchips and highly expensive raw materials.

The auto supplier is assuming a gradual improvement in the supply situation in the months ahead. At the same time, however, the Hanoverians restricted the presentation of their current figures on Wednesday: “The shortage of semiconductors and rising raw material prices are expected to weigh on the automotive industry in the fourth quarter of this year as well as in the whole of 2022.”

In October, the Dax group had already lowered the forecast for 2021, mainly due to a lack of electronic parts. Looking back on the period from July to September, it was now said that the chip delivery problems had “significant effects on sales and earnings, which could only be partially offset by the positive development in sales of replacement tires and industrial products”.

Conti also has to spend more on important supplies from other companies, which has “negative effects”. In the tire sector, raw materials became even more expensive; in the core business with automotive components, the procurement of semiconductors that were still available also resulted in higher costs for logistics.

Sales fell by more than 7 percent year-on-year

The preliminary figures for the third quarter were confirmed by the management around CEO Nikolai Setzer. Sales fell year-on-year by more than 7 percent to a good 8 billion euros. Earnings before interest and taxes adjusted for special effects, by which Continental measures economic success in day-to-day business, fell by over 42 percent to 419 million euros. The bottom line was a profit of 309 million euros. In the same period of the previous year, high depreciation in particular caused a loss of 719 million euros.

There were clear differences in the development of the two main divisions, which Conti now includes after spinning off drive technology into the new company Vitesco. In the case of the remaining auto technology, which was fundamentally restructured, sales in the third quarter fell by almost 16 percent to 3.5 billion euros as a result of the global decline in vehicle production. In the case of rubber products such as tires or machine components, on the other hand, there was a slight increase in sales of a little more than 1 percent to 4.4 billion euros compared to the previous year. “The business area continued to benefit from a strong global truck and car replacement tire business.”

Setzer sees the company as well positioned in the medium term to get out of the difficult industry situation. The product mix contains a high proportion of electronics. “On the one hand, we are severely affected by the lack of semiconductors, on the other hand, vehicles are being equipped with more and more electronics, sensors and software.”

The group, which now has 192,000 employees worldwide after the Vitesco spin-off, assumes that the worst could be over in the past third quarter. But the subject is far from over, said Setzer at an industry conference of the “Handelsblatt”: “Of course, safety stocks and a certain size always help. But better exchange and more reliable planning are also necessary. ” The delivery bottlenecks are likely to continue. The Conti boss considers the higher costs of metallic raw materials to be an additional challenge.

Meanwhile, the group landed its first major order for its innovative OLED displays in car interiors. With an order volume of around one billion euros, the displays will be used in a “high-volume series vehicle” from a global car manufacturer. Conti did not disclose the name of the customer. Overall, the order backlog in this area is 5.5 billion euros.

dpa

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