DGAP-News: Continental AG
/ Key word(s): Half Year Results
- Global vehicle production in the second quarter at 12.3 million units (down 45%) Hanover, August 5, 2020. As expected, the sales and earnings of Continental were down substantially in the second quarter of 2020 due to the effects of the coronavirus pandemic. Continental nonetheless outperformed its markets. "A market crash in the automotive industry like the one we are experiencing now has not been seen since the end of the Second World War. In the first and second quarters of 2020, when the economic crisis in the automotive industry was at its worst, we outperformed the respective markets in China, the USA and Europe," said Dr. Elmar Degenhart, Continental CEO, when presenting the half-year figures on Wednesday in Hanover. Consolidated sales in the second quarter amounted to €6.6 billion (Q2 2019: €11.3 billion). Before changes in the scope of consolidation and exchange-rate effects, sales declined by 40 percent. At the same time, the global production of passenger cars and light commercial vehicles fell by about 45 percent in the second quarter to a total of 12.3 million units (Q2 2019: 22.1 million units), according to preliminary data. As a result of temporary plant closures due to the coronavirus pandemic, second-quarter production figures in Europe and North America were very weak, at 2.0 million units (-63 percent) and 1.3 million units (-69 percent), respectively. In contrast, production in China increased to 9 percent year-on-year thanks to government subsidy programs, with 5.9 million passenger cars and light commercial vehicles rolling off the lines. The adjusted operating result in the second quarter was -€634 million (Q2 2019: €865 million), corresponding to an adjusted EBIT margin of -9.6 percent (Q2 2019: 7.7 percent). Net income totaled -€741 million (Q2 2019: €485 million). "Continental is forward-looking and well prepared for crises, which is evident particularly in such a challenging situation. We are continuing to keep our targets firmly in sight," Degenhart said. Continental benefits from its cross-sectoral setup with a strong foothold in the industrial and replacement tire business, in addition to its automotive original equipment business. "Over the past few years, we have consistently strengthened our business with industrial and end customers. This makes us less susceptible to the ups and downs of the automotive industry," commented Degenhart. Continental's business with industrial and end customers was down 23 percent in the second quarter, demonstrating that it is substantially more robust than global vehicle production, which fell by 45 percent in the same period. Stricter cost discipline, lower capital expenditure and reduced working hours In the second quarter of 2020, Continental reduced its capital expenditure on property, plant and equipment, and software to €448 million (Q2 2019: €785 million). All business areas contributed to the decrease. As a result, the capital expenditure ratio was down to 6.8 percent after 7.0 percent in the comparative period of the previous year, despite the substantial decrease in sales. For the year as a whole, the company is planning to reduce its investments by more than a quarter compared to the previous year. At the end of the first quarter, Continental had estimated its savings potential for investments at more than 20 percent. Capital expenditure on research and development in the second quarter amounted to €809 million (Q2 2019: €917 million). As a result of the substantial decrease in sales, the ratio rose to 12.2 percent after 8.1 percent in the same period of the previous year. Since early June, all Continental plants worldwide have resumed production. Public life in some regions is still restricted by the coronavirus pandemic, however, and some plants' capacities are being used at greatly reduced levels in line with the substantially lower global demand. Depending on how the pandemic and its consequences continue to develop, it is possible that the company will once again have to make temporary adjustments to production at certain plants. At present, about 25 percent of all employees are working reduced hours worldwide. In Germany, around 30,000 employees worked an average of five days less in June. Still no detailed forecast due to economic uncertainty For the third quarter of 2020, Continental expects global vehicle production to fall substantially by -10 to -20 percent year-on-year. Market observers currently estimate that fewer than 70 million vehicles will be produced in 2020, which would correspond to a year-on-year decrease of more than 20 percent (2019: 89 million vehicles). Cash and cash equivalents at a very high level; capital expenditure reduced substantially Key figures for the Continental Group
1 Capital expenditure on property, plant and equipment, and software. Continental accelerates AI development using supercomputer Last week, the technology company announced that since early 2020, it has been advancing the development of future technologies with a supercomputer that is unrivaled in the automotive industry. From this new computer cluster, the developers at Continental's locations around the world get the computing power and storage that they need for highly complex and data-intensive developments - including, in particular, those relating to artificial intelligence. This is required for the development of pioneering future technologies in assisted, automated and autonomous driving, for example. The new supercomputer from Continental is ranked according to the current list of TOP500 supercomputers as the top system in the automotive industry. Continental is thus accelerating its development, which leads in terms of technology, while also underlining its core competencies in software and networking as well as in the architecture of systems. "Software is the oxygen of the industry, and we expect it to generate enormous profitable growth in the future. The reason is that there will be more and more functions in the vehicle," Degenhart stated with confidence. He pointed out that value creation with computer programs will increase accordingly, growing by double-digit percentages each year. "Here, we are in a great position as a software powerhouse with more than 20,000 software and IT experts," he added. For example, with the development of high-performance computers - the digital heart of modern vehicles - Continental has already secured lifetime sales exceeding €3 billion. A single customer alone will probably have received more than 2.5 million of such compact high-performance computers by 2022. This puts Continental among the front-running companies in this area of the industry. A particularly high-performance vehicle server was recently developed for Volkswagen. This In-Car Application Server (ICAS1) enables a high degree of vehicle connectivity for the new electric vehicles in VW's ID. model series - such as the ability to quickly and securely install safety updates via a wireless connection. By 2022, Continental expects more than ten further projects. Coronavirus bridge: innovative ways to safeguard productivity and employment Key figures for the group sectors
1 Capital expenditure on property, plant and equipment, and software.
1 Capital expenditure on property, plant and equipment, and software. Business outside of the automotive industry develops better in the second quarter The Rubber Technologies group sector achieved sales of €3.0 billion (Q2 2019: €4.5 billion) and an adjusted EBIT margin of 1.2 percent (Q2 2019: 11.9 percent). Organic sales growth came to -33.1 percent. In the Powertrain Technologies group sector, sales amounted to €1.1 billion (Q2 2019: €2.0 billion) and the adjusted EBIT margin was -16.3 percent (Q2 2019: 3.7 percent). Organic sales growth came to -40.8 percent. Continental develops pioneering technologies and services for sustainable and connected mobility of people and their goods. Founded in 1871, the technology company offers safe, efficient, intelligent and affordable solutions for vehicles, machines, traffic and transportation. In 2019, Continental generated sales of €44.5 billion and currently employs more than 230,000 people in 59 countries and markets.
Press contact Vincent Charles
05.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | Continental AG |
Vahrenwalder Straße 9 | |
30165 Hannover | |
Germany | |
Phone: | +49 (0)511 938-1068 |
Fax: | +49 (0)511 938-1080 |
E-mail: | ir@conti.de |
Internet: | www.continental-corporation.com/de |
ISIN: | DE0005439004 |
WKN: | 543900 |
Indices: | DAX |
Listed: | Regulated Market in Frankfurt (Prime Standard), Hamburg, Hanover, Stuttgart; Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Tradegate Exchange; Luxembourg Stock Exchange, SIX |
EQS News ID: | 1110233 |
End of News | DGAP News Service |
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1110233 05.08.2020
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