Continental AG's net loss contracts to £825 million in 2020

Continental AG (ETR: CON) said on Tuesday that its net loss contracted in 2020 despite a decline in sales due to the ongoing Coronavirus pandemic. The company, however, expressed confidence that its financial performance will recover sharply in the upcoming months. CFO Wolfgang Schaefer commented on the financial update on Tuesday and said:

“The effects of the ongoing Coronavirus pandemic remain a source of uncertainty too. All in all, 2021 will, therefore, remain challenging. We nevertheless anticipate that the market will recover significantly compared to 2020.”

Continental AG shares, that you can learn to buy online here, opened about 4% down on Tuesday and lost another 3% in the next hour. Including the price action, the stock is now exchanging hands at £103.20 per share after recovering from a low of £46.42 per share in March 2020, when the impact of the COVID-19 crisis was at its peak.    

Continental proposes to suspend dividend for 2020

Continental AG said that it concluded 2020 with a net loss of £824.85 million. In the previous year, it had posted a much broader £1.05 billion of net loss. The German firm valued its revenue at £32.35 billion last year that represents a 15% year over year decline.

Owing to the dovish performance, Continental proposed to suspend dividend payment for 2020 in a bid to shore up finances amidst the health emergency that has so far infected more than 2.5 million people in Germany and caused over 72 thousand deaths.

Last month, Continental announced to have taken a minority stake in object recognition start-up Recogni – a move that it said will help it expand its footprint in autonomous driving technology.

Continental AG’s guidance for 2021

For 2021, the car parts supplier forecasts group sales to fall in the range of £34.73 billion to £36.44 billion. Continental expects up to 6% of adjusted EBIT (earnings before interest and taxes) margin this year.

Continental’s full-year financial report comes on the same day when the German package delivery company, Deutsche Post AG, said that its revenue climbed by 13% on an annualised basis in the fiscal fourth quarter as the COVID-19 crisis fuelled eCommerce in recent months.

Continental AG performed only slightly upbeat in the stock market last year with an annual gain of roughly 5%. At the time of writing, the Hanover-headquartered company is valued at £20.68 billion.