Continental reports “weak first quarter”, expects earning to improve in 2024

After a “weak first quarter in 2024”, Continental expects earnings to improve as the year progresses – particularly in the second half of the year, the company announced. Overall, Continental still anticipates consolidated sales for 2024 of around €41.0 billion to €44.0 billion and an adjusted EBIT margin of around 6.0 to 7.0 percent.

“We are pursuing our goals resolutely and sustainably. We are on track with the implementation of our measures to achieve our mid-term targets. And in 2024 we will be taking another step forward. The first quarter will be our weakest this year. As the year progresses, we will see improvements across the three group sectors Automotive, Tires and ContiTech,” Continental CEO Nikolai Setzer said in Hanover, Germany, on Wednesday.

In the first quarter of 2024, Continental achieved consolidated sales of €9.8 billion (Q1 2023:  €10.3 billion, -5.0 percent). Its adjusted operating result was €196 million (Q1 2023: €574 million, -65.8 percent), corresponding to an adjusted EBIT margin of 2.0 percent (Q1 2023: 5.6 percent).

Net income in the first quarter amounted to -€53 million (Q1 2023: €382 million, -113.9 percent). Adjusted free cash flow was -€1.1 billion (Q1 2023: -€949 million). 

“As announced, adjusted free cash flow in the first quarter was heavily impacted by the €500 million payment for the buyback of shares in ContiTech AG. For the year, we still anticipate adjusted free cash flow of around €0.7 billion to €1.1 billion,” said Continental CFO Katja Garcia Vila, adding: “Despite the weak first quarter, we see sufficient potential for improvement across all group sectors, which is why we are confirming our outlook for fiscal 2024.”

At the start of the year, the global production of passenger cars and light commercial vehicles recorded a slight decline year-on-year, falling by around 1 percent compared with the first quarter of 2023 to 21.2 million units (Q1 2023: 21.4 million units). 

Vehicle production in Continental’s core market of Europe, in particular, was weaker from January to March 2024 than in the prior-year period, at around 4.4 million units (-3 percent). In North America, production rose slightly to around 3.9 million vehicles (+1 percent). China had a good start to the year, producing around 6.1 million vehicles in the first quarter of 2024, up 4 percent year-on-year. 

For the year as a whole, Continental still expects global passenger car and light commercial vehicle production to be roughly on par with the previous year, trending in a range of -1 to +1 percent.