Continental forecasts lower full-year sales as COVID-19 weighs on demand

Written by: Wajeeh Khan
November 11, 2020
  • Continental forecasts lower full-year sales as COVID-19 weighs on demand.
  • The German firm reports £9.16 billion of sales and £740.04 of adjusted EBIT in Q3.
  • The automotive parts maker expects free cash flow to remain positive this year.

Continental AG (ETR: CON) revised its guidance for 2020 on Wednesday and said that it now expects a smaller adjusted earnings margin and lower sales for the full year. In the prior year (fiscal 2019), Continental AG had seen a net loss of £1.09 billion, as per the report published in March.

Continental AG opened more than 2.5% down on Wednesday and tanked another 1.5% in the next hour. On a year to date basis, shares of the company are currently about 10% down in the stock market after recovering almost 100% since its low in mid-March. Interested in investing in the stock market online? Here’s a simple guide to get you started.

Continental forecasts £33.36 billion of sales in fiscal 2020

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Continental now forecasts £33.36 billion of sales in fiscal 2020. It expects its full-year adjusted EBIT (earnings before interest and taxes) margin to stand at around 3% this year. In comparison, the car-part supplier had reported £39.56 billion of sales in 2019. Its adjusted EBIT margin stood at 7.4% last year.

The German company also highlighted on Wednesday that additional costs and impairments attributed primarily to restructuring will affect its net profit and EBIT in the final quarter of 2020. Excluding carve-out effects and acquisitions, Continental said that free cash flow will remain positive this year but is expected to be significantly weaker as compared to 2019.

The automotive parts manufacturing company ad suspended its 2020 guidance earlier this year in April due to the COVID-19 crisis that has so far infected a little under 52 million people worldwide and caused more than 1.2 million deaths. Continental said in late October that it had taken a stake in AEye to enhance its autonomous vehicle technology.

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Continental’s financial results for the fiscal third quarter

In the fiscal third quarter, as per Continental, its consolidated sales came in at £9.16 billion versus a higher £9.87 billion in the same quarter last year. The German firm printed reported £740.04 million of adjusted EBIT in Q3 versus the year-ago figure of £544.36 million. Adjusted EBIT margin stood at 8.1% in the recent quarter versus 5.6% last year.

Continental AG performed slightly downbeat in the stock market last year with an annual decline of roughly 7%. At the time of writing, the German multinational automotive parts manufacturing company has a market cap of £18.73 billion.