HANOVER, Germany—COVID-19 hasn't changed Continental A.G.'s vision for the future, just changed the time line a bit.
Continental has delayed the spinoff of its powertrain unit, Vitesco Technologies, due to the ongoing economic uncertainty caused by the coronavirus pandemic. Vitesco was scheduled to be spun off this year. Continental said it will hold off on the move until the market environment improves and stabilizes.
"The current COVID-19 pandemic is temporarily dampening the market outlooks, but not our high motivation for independence," Vitesco Technologies CEO Andreas Wolf said in a statement. "We are now arranging the organizational and procedural requirements so that Continental and Vitesco Technologies are in a position to swiftly implement the spin-off with listing once the market environment is suitable."
The decision to delay the spin off also ensures that both Continental and Vitesco are able to navigate the uncertain economic terrain caused the coronavirus pandemic and offers both better flexibility once the move is made, Continental said.
"Without a doubt, clean drive systems are the value-creating business of the future," Continental CEO Elmar Degenhart said. "We are therefore more convinced than ever that Vitesco Technologies has very good prospects for profitable growth. ... Although the effects of the coronavirus crisis has temporarily halted the market, the basis for future market growth has not changed. We are, therefore, continuing to rigorously pursue our plans for the spin-off."
In the coming weeks, Continental said, the executive board will discuss the transitional period. Once a plan is set, it will need to be approved by the supervisory board and at the annual shareholders' meeting.