Continental AG Q3 Results

Shares of Continental AG (ETR:CONG) (OTC:CTTAY) surged following the company’s Q3 results, reporting a 36% increase in adjusted operating profit (EBIT) to €873 million.

At 3:31 am (0831 GMT), Continental AG was trading 6.9% higher at €60.41.

This growth increased the adjusted EBIT margin to 8.9%, up from 6.3% in Q3 2022, despite challenges in its main sectors, particularly the automotive market.

The company attributed this profitability increase to rigorous cost management and efficiency improvements, aided by favorable price adjustments in its Automotive division.

Consolidated sales for the quarter fell by 4% to €9.8 billion, down from €10.2 billion in the previous year. The Automotive sector experienced a 4.7% sales decline to €4.8 billion, but improved profitability was noted.

CFO Olaf Schick stated, "Faced with weak automotive production, we achieved this by reducing costs and adjusting prices. Tires are performing well in profitability, with winter tire sales starting strong. However, ContiTech continues to face a weak industrial environment in Europe and North America."

The adjusted EBIT margin rose to 4.2% from 2.8% a year ago due to efficiency measures and favorable price negotiations with automotive manufacturers.

CEO Nikolai Setzer mentioned, "Automotive is on track to fulfill the requirements for a spin-off by the end of 2025. This spin-off is still being evaluated."

Looking ahead, Continental anticipates further gains in Automotive, driven by expected higher production volumes and customer product launches in Q4.

The Tires division achieved a slight sales increase of 1.9% to €3.5 billion, with an adjusted EBIT margin of 14.5%. Strong winter tire sales in Europe and the expansion of its Rayong plant in Thailand to meet rising Asia-Pacific demand will further drive growth.

Conversely, ContiTech, Continental’s industrial solutions division, faced challenges from weak demand in Europe and North America, with a 9.9% sales drop to €1.5 billion and a lower adjusted EBIT margin of 4.5%.

As a result, Continental adjusted its full-year outlook, revising expected Group sales to €39.5–42.0 billion, down from the previously estimated €40.0–42.5 billion.