Continental shares slumped Wednesday, after the tyre maker issued its second profit waning of the year. The automotive equipment maker said that a combination of weaker-than-expected tyre sales, higher costs and warranty claims, had led to the lower its full-year performance outlook.
By 1425 BST, Continental shares were 13.76% lower at €159.80. The stock has been trading broadly lower in recent weeks.
Continental profit warning
Earlier Wednesday, the German tyre maker said that it is now expecting full-year consolidated revenues of €46 billion, down from a previous forecast for $47 billion of sales. That reduction comes after the auto equipment maker said the negative effect of the exchange rate will be bigger than previously anticipated.
And, before looking at the exchange rate impact, the group said it expects total sales of €28 billion across its automotive unit, down from the €28.5 billion it had previously expected.
The outlook for tyre sales, meanwhile, was also expected to be lower at €18 billion, from €18.5 billion. Continental is also reducing its cash flow outlook.
“We are reducing the guidance for free cash flow before acquisitions and before the outflow for the funding of the US pension plans from about €2 billion to around €1.6 billion in 2018,” Continental said.
In addition to those details, the German group said guidance issued earlier in August over that higher costs of raw materials, remains in place for this latest update.
The automotive equipment maker added that it no longer expects its Powertrain unit to achieve the forecasts issued in 2017. Continental preciously said it anticipated its Powertrain unit to achieve sales of €10 billion and EBIT of €850 million.
It said forecasts for the subsidiary would “be updated and revised in the course of the carve out of the division.” Powertrain is set to be listed separately from the Continental Group stocks.