The technology company Continental has announced that it has generated consolidated sales of €10.3 billion in Q1CY23, up by 11.1% over the same time last year.
The company anticipates a further improvement in earnings over the year, in particular, due to rising production figures for passenger cars and light commercial vehicles, inflation-related price adjustments and cost discipline.
However, due to inflation, the company is expected to incur additional costs in 2023 of around €1.7 billion for materials, wages and salaries, as well as energy and logistics.
Nevertheless, Continental still anticipates consolidated sales for fiscal 2023 of around €42 billion to €45 billion and an adjusted EBIT margin of around 5.5 to 6.5%. Adjusted free cash flow for the current year is expected to be around €0.8 billion to €1.2 billion.
In the Automotive group sector, sales in Q1CY23 increased by 18.1% to €5.0 billion against €4.2 billion in Q1CY22. With its sales growing organically by 17.1% before exchange-rate effects and changes in the scope of consolidation and global automotive production rising only by around 6%, the group sector again outperformed the market.
Owing to the additional inflation-related costs of around €1 billion in 2023 in Automotive alone, price agreements are again being negotiated in partnership with customers. These agreements, coupled with rising automotive production, should lead to an improvement in the margin over the year, the company noted.
According to the company, the improvement should also be bolstered by operational measures such as the stabilisation of supply chains, the programme to improve efficiency in research and development, and savings under the Transformation 2019–2029 structural programme.
In addition, the global company recorded a high order volume in the Automotive group sector. This amounted to around €6.6 billion, an increase of 13.3% in the first three months of 2023 and included a major order in the Autonomous Mobility business area worth around €1.7 billion for 360-degree radar coverage from front, rear, side and long-range radars. They ensure the all-around monitoring of a vehicle’s surroundings, thus increasing road safety.
The Autonomous Mobility business area has also announced an exclusive partnership with Aurora Innovation. Together, Continental and Aurora will bring autonomous trucking systems to the American market – as early as 2027. The system will be available for carriers and commercial fleet operators across the USA and will help reduce costs to facilitate broader adoption. The company will contribute the entire hardware system and a complete fallback system.
According to preliminary figures, the global production of passenger cars and light commercial vehicles weakened slightly compared with the fourth quarter of 2022 (Q4 2022: 21.9 million units) but increased year-on-year. Compared with the first quarter of 2022, it rose by around 6% to 21.1 million units (Q1 2022: 19.9 million units).
The press release from Continental noted that vehicle production in Europe, in particular, grew to around 4.5 million units in the period from January to March 2023, up by 17%. North America recorded an increase of around 10% to 3.9 million units. China, by contrast, suffered a weak start to the year, producing around 5.7 million vehicles in the first quarter of 2023. This was about 8% down year-on-year.
For the year as a whole, Continental continues to expect the global production of passenger cars and light commercial vehicles to increase by 2% to 4% compared with the previous year’s figure of around 82.3 million vehicles.
Good Growth In Tyres As Well
Continental noted that its Tyres Group had a good first quarter too. Despite declining volumes in the tyre-replacement business, sales in tyres increased to €3.5 billion, representing a 5.1% growth from Q1CY22’s €3.3 billion.
The company noted that in line with the prevailing customer structure, the industrial business will be divided regionally into three business areas: Industrial Solutions Americas, Industrial Solutions APAC (Asia & Pacific) and Industrial Solutions EMEA (Europe & Middle East).
The majority of ContiTech’s automotive activities will be consolidated in the Original Equipment Solutions business area, which will operate globally in accordance with its customer structure. The Surface Solutions business area will retain its current structure, the company noted.
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