Hannover (dpa) – After the fall of Corona in the spring, business at Continental is improving again, but costly corporate restructuring and bleak prospects for global car production keep the supplier under pressure.
As the Dax group announced on Wednesday, the net loss in the third quarter was just under € 720 million. That’s just a slight improvement compared to the second quarter of the year, when the bottom line was less than 741 million euros on the balance sheet. On the other hand, Conti reported a clear improvement in ongoing operations: the deficit before interest, taxes and special items of 634 million euros was recently transformed into an adjusted profit of 832 million euros.
“We did remarkably well in operational terms in the third quarter,” said CEO Elmar Degenhart. “In a market environment that remains challenging, we are showing a more than satisfactory performance that we can build on.” The auto market stabilized in China and North America. The turnover of Hanoverians is well below the level of the previous year: it fell by more than 7 percent to 10.3 billion euros. Since the beginning of the year, revenues have even plummeted by almost a fifth; On this basis, the net loss was more than a quarter (-26.1 percent) higher than in 2019.
Degenhart, who will be replaced as head of the board at the end of November, spoke of “a certain degree of caution” that must be maintained in the face of the consequences of the virus crisis. However, there is reason to be more optimistic after the unprecedented weak second quarter. Much will depend on how well the pandemic is contained. During the first Corona wave, the automotive and mechanical engineering industries struggled with drastic drops in orders and disrupted supply chains.
By 2020, Conti expects a global production decline of up to 19 percent for passenger cars and light commercial vehicles. According to an updated forecast, the group’s sales could reach 37.5 billion euros (2019: 44.5 billion euros), provided that, among other things, there are no new and unexpected effects of the ongoing coronavirus pandemic.
Another important reason for ongoing charges is high depreciation and renewal costs. Continental has to correct the value of parts of the company once taken over, such as the former Siemens subsidiary VDO, as well as of certain production facilities. Added to this are the costs of the controversial “Transformation 2019-2029” strategy, with which the Conti Group intends to continue developing in the direction of software and electronics. Until the end of the year, “additional expenses not yet determined” are expected. And the provisions for warranties and higher research and development costs are likely to have a bigger impact than previously assumed, the group warned.
Trade unionists and works councils recently faced expanding job cuts, and in factories such as Aachen or Karben, most production must be shut down. Conti tries to further qualify as many employees as possible in the framework of structural change in the industry. However, many of the 30,000 affected jobs around the world are also being relocated or canceled. Degenhart explained: “With the most recent decisions in the Management and Supervisory Boards, we have passed an important milestone and are now increasingly looking to the future.”