Continental Cuts Steering on Weak Truck Tire Gross sales
Tires in manufacturing at a Continental Tire manufacturing plant. The corporate revised its general gross sales steering for all of 2023 to round $45.56 billion to $48.85 billion from $46.11 billion to $49.4 billion. (Continental)
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Weaker-than-expected North American and European business car substitute tire gross sales within the second quarter of 2023 and thru the rest of the yr pressured Continental to chop income steering for its tire unit and the corporate as an entire.
North American business car substitute tire gross sales fell 15% year-over-year in the latest three-month interval, the corporate mentioned Aug. 9, and full-year gross sales are anticipated to be between 8% and 10% decrease, in contrast with earlier expectations of a 2% to five% lower.
Continental’s European business car substitute tire gross sales duplicated the weak spot throughout the Atlantic, additionally falling 15% year-over-year within the second quarter. For the full-year interval, the corporate now expects European business car tire gross sales to say no by between 6% and eight%, in contrast with earlier steering of between a 1% lower and a 2% enhance.
Consequently, revenues for the full-year interval at Continental’s tires phase are anticipated to complete $15.37 billion to $16.47 billion, not the $15.92 billion to $17.02 billion beforehand forecast, the corporate mentioned in a presentation accompanying its second-quarter earnings.
The corporate additionally revised its general gross sales steering for all of 2023 to round $45.56 billion to $48.85 billion from $46.11 billion to $49.4 billion beforehand. Continental experiences its earnings and steering in euros.
Continental’s web earnings within the second quarter of 2023 totaled $229.45 million, in contrast with a lack of $275.57 million within the year-earlier interval on account of geopolitical and provide chain components.
Continental’s consolidated gross sales totaled $11.42 billion in the latest quarter, in contrast with $10.32 billion within the yr earlier-quarter, a rise of 10.4%.
The Continental Tire exhibit at a 2023 business occasion. Income at Continental’s Tires unit elevated within the second quarter regardless of the droop in substitute gross sales, rising 2.3% year-on-year to $3.84 billion. (John Sommers II for Transport Subjects)
A big a part of the rise within the firm’s general income was a 19% soar in gross sales at its Automotive phase to $5.6 billion within the second quarter from $4.72 billion a yr earlier, which it mentioned was underpinned by a 16% enhance in international automotive manufacturing.
Continental’s Automotive unit produces know-how for passive security, brake, chassis, movement and movement management methods, and now contains the German firm’s autonomous driving heavy-duty trucking partnership with Aurora.
Aurora and Continental plan to introduce mass market autonomous trucking methods in 2027, and their first market can be the USA.
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Income at Continental’s Tires unit elevated within the second quarter regardless of the droop in substitute gross sales, rising 2.3% year-on-year to $3.84 billion from $3.73 billion a yr earlier. A part of that resulted from a 7% year-on-year enhance in North American business car manufacturing, it famous.
Continental expects North American business car manufacturing to be extra strong via the rest of 2023 too. The corporate now sees business car manufacturing throughout the continent rising by 3%-7% year-on-year in 2023, in contrast with earlier expectations of a 2% decline to a 2% enhance.
Ends in the latest quarter on the Tires unit had been additionally helped by the worth combine achieved at the same time as substitute gross sales disillusioned, Chief Monetary Officer Katja Dürrfeld mentioned throughout the firm’s earnings name.
Dürrfeld mentioned costs remained very sturdy within the premium sector and {that a} additional enhance would come from worth escalators with unique gear producers kicking in throughout the second half of 2023.
There could be no worth cuts regardless of the anticipated decline in substitute gross sales via the remainder of the yr, she mentioned in response to an analyst’s query on the decision.
Some sellers are hoping for worth reductions, mentioned the CFO, whereas already holding excessive inventories. Restocking is happening later within the yr than was the case traditionally because of the stock ranges and worth expectations, she added.
