Continental's Q3 2019 operating result down 20 pct

Source: Xinhua | 2019-11-13

German car parts giant Continental reported on Tuesday consolidated sales of 11.1 billion euros (12.2 billion U.S. dollars) in the third quarter (Q3) of 2019, marking a year-on-year increase of three percent.
The company's adjusted operating result (adjusted EBIT) declined by around 20 percent and stood at 615 million euros, resulting in an adjusted operating margin of 5.6 percent in Q3, according to Continental.
"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," said Chief Executive Officer (CEO) Elmar Degenhart.
The company's net losses amounted to nearly two billion euros in Q3, and its net income was impacted by "one-time effects of goodwill impairment" and impairment on intangible assets totaling about 2.5 billion euros in Q3.
Continental's shares declined by around 1.3 percent following the publication of the company's quarterly results and stood at the bottom of Germany's benchmark stock index DAX midday on Tuesday local time.
"The current situation requires us to enhance our long-term competiveness," Degenhart stressed.
Back in September, Continental unveiled its global "Transformation 2019-2029" structural program, which foresees "changes in up to 20,000 jobs" over the next ten years.
Operational redundancies would be the "very last resort" in the scope of the company strategy, Degenhart said in September, but he did not rule them out back then.
Although the turnover of Continental's automotive segment increased by 2.2 percent year-on-year in Q3, the company does not expect a "material improvement in global production in the next five years," said Chief Financial Officer (CFO) Wolfgang Schaefer.
"Fewer than 90 million vehicles are expected to be produced worldwide this year," Schaefer said on Tuesday.
This is a "clear slowdown" in global production volumes since "compared to the market assumptions" the "fewer than 90 million vehicles" expected to be produced in 2019 would represent a "decrease of over ten million vehicles," according to Schaefer.
For 2020, Continental expects a "sideways trend" in car production "at best." However, a decline in the global production of passenger cars "for a third year in succession remains a distinct possibility," Schaefer noted.