Auto Parts Manufacturer Continental Issues Revised Profit Guidance

The technology company continues to expect to grow faster than its relevant markets, the company said.

Continental AG revised its guidance for Fiscal 2018, citing lowered sales expectations and increases in costs and warranty claims.

A statement from the company Wednesday said, in part, “The lower sales guidance for this year is a result primarily of two developments. First, the original equipment business has fallen short of expectations, especially in Europe and China in the Automotive divisions as well as in the ContiTech division. Second, weak demand in the tire markets in both regions has led to lower sales expectations.”

The company added, “Despite these effects, the technology company continues to expect to grow faster than its relevant markets.”

The company expects adjusted EBIT margin of more than 9 percent instead of more than 10 percent.

“Development costs rose in the Automotive Group due to the high order intake, which reached a record level of more than €20 billion in the first half year. Additional burdens resulted from start-up costs in the ContiTech division as well as from higher costs in the powertrain sector due to the transition to products and systems for hybrid and electric vehicles. The company has responded by initiating measures to cut production costs. Furthermore, it is adapting its planned investments to the lower sales expectations,” the company statement said.

“The revised sales guidance for fiscal 2018 including all expected negative exchange-rate effects amounts to about €45 billion. In comparison to sales in 2017, organic growth of more than 4 percent is anticipated. The company is expecting an adjusted EBIT margin of more than 9 percent in 2018.

Continental said it will publish the results for the first nine months of Nov. 8, 2018.

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