After two tough years of losses, Continental has gotten out of the red, but is preparing for new problems for the global auto industry due to the war in Ukraine and other risks. The supplier and tire manufacturer from Hanover made a bottom line profit of 1.46 billion euros in 2021. Before that, the Corona sales slump and the restructuring of the group had weighed on the Dax company. Stabilization was recently achieved – although the environment was “persistently turbulent”, as it was said on Wednesday.
Electronics bottlenecks hit industry worldwide. Orders could not be processed. “In terms of supply, we expect a slight improvement in the second half of the year,” said CFO Katja Dürrfeld. However, the additional costs for procurement and logistics are likely to level off at up to 2.3 billion euros.
The industry is now looking to Eastern Europe with great concern. In view of the Russian invasion of Ukraine, Continental also decided to completely stop its production in and foreign trade with Russia for the time being. “The situation is extremely dynamic, it changes every day, every hour,” said CEO Nikolai Setzer. Alternative locations for delivery from Kaluga, where the group has a plant for tires and machine parts, are being examined. The share of sales in Russia is low at less than one percent. However, Setzer believes that supply problems for car manufacturers with wiring harnesses from the Ukraine could have an indirect effect.
Management is still expecting business to pick up in 2022. However, it warned: “Should the geopolitical situation remain tense or even worsen, this could cause a lasting disruption in production, supply chains and demand.” In the current scenario, Conti expects sales of 38 to 40 billion euros.
“The past fiscal year again challenged us greatly,” said Setzer. Conti missed a new structure that is supposed to enhance the role of autonomous driving. He did not want to comment on rumors about a possible IPO of the division. Setzer was also rather taciturn when asked what the project between major customer Volkswagen and its rival Bosch means in this area: “We are in constant contact with all customers, we are open to cooperation.” Tires, meanwhile, could get more expensive. “We see further substantial price increases for raw materials, not only for metals but also for oil-based ones, which are important for our tire business,” explained Setzer. In addition, the Conti management is continuing its austerity course, as part of which old jobs in hydraulics and mechanics are being cut and new ones are being created. There is progress in the qualification of the workforce.