HANOVER, Germany—Continental A.G. is assessing additional cost-cutting measures in response to market deterioration in the wake of the COVID-19 pandemic.
"The extent of further potential measures will be aligned with the medium-term market development," Silke Bernhardt, head of communications of Continental's tires business area, told European Rubber Journal without providing further details.
The comments came in response to a recent report by German news weekly WirtschaftsWoche, which cited an internal company video, in which Continental CEO Elmar Degenhart suggested forced layoffs could be forthcoming.
"The subject of current reporting (Wirtschaftswoche) are statements made in the context of an internal event of Continental A.G. ... We generally do not comment on this," Bernhardt said in a written statement to ERJ.
Continental disclosed that it was taking a series of new cost-cutting measures in March in addition to its 10-year structural program, which was announced in September. The program focuses on the medium- and long-term competitiveness of the German group, and is driven by transformation within the automotive industry.
"As soon as the current highly volatile market environment has stabilized and we can better predict how it will develop, ... (the company) will consider and decide any additional measures that may become necessary," Bernhardt said.
Continental reported weak results in May for the quarter ended March 31, posting a 21 percent decline in earnings on 11 percent lower sales.
The German supplier previously said it expects the second quarter to be "the weakest" this year, with the impact of the coronavirus likely to be particularly severe in Europe and North America.
Throughout the first quarter and into the second quarter, Continental had been implementing measures intended to address the financial hardships it faced.
In April, the company took steps to adjust to weakening automotive demand and balance its finances accordingly. At the time, it disclosed plans to reduce costs by shortening the workweek for its employees. Continental said this impacted about 60 percent of its 240,000 employees.
In a statement issued at the end of the first quarter, Continental said it had 239,649 employees, about 1,800 fewer than it had at the start of the quarter. The company did not specify a reason for the reduction.
In Germany, the shortened workweek resulted in many employees working six less days in April than they traditionally would have, and Continental said in a May 7 news release the shortened workweek plan would continue through May.
Meanwhile, the Continental Executive Board extended its 10 percent reduction in fixed salary. Originally intended as one-month cut, the 10 percent pay reduction will continue through July.
Additional cost-saving measures previously were instituted, particularly on the capital expenditure side, the auto supplier said in April. Continental is postponing any projects and investments not deemed urgent, and is aiming to reduce its investments by 20 percent.