Continental Q2 earnings up despite lower sales

HANOVER, Germany—Continental A.G. significantly increased earnings in the second quarter, ended June 30, despite a drop in sales.

Conti ended the period with a 40.6-percent surge in adjusted operating income (EBIT) to $654 million on a 4.1-percent decrease in sales to $9.29 billion.

Net income jumped 46.2 percent to $283.3 million.

The results prompted Continental to adjust its annual outlook due in large part to lower expected production of passenger cars and light commercial vehicles.

"The measures we have adopted to reduce costs and our commitment to implementing them effectively are starting to pay off and helped us to improve significantly compared with the first quarter. We will not let up in the second half of the year and will continue to work hard to achieve the financial targets we have set ourselves," said Continental CFO Olaf Schick.

The company's Tires group sales slipped 1.7 percent to $3.1 billion for the second quarter. However, its EBIT margin increased to 14.7 percent, compared with 13.7 percent in the year-ago period, and up sharply from the first quarter of 2024, benefiting from a strong tire-replacement business, especially in Europe, Conti said.

"As announced, we improved in all group sectors compared with the first quarter. We have made significant progress in Automotive and aim to improve even further in the coming quarters. Tires achieved good results, while ContiTech also performed well despite a still weak industrial environment.

"In the current challenging market environment, the improvements in earnings are mainly due to the measures we have taken in the group sectors," said Continental CEO Nikolai Setzer.

Conti's EBIT dropped 16.2 percent to $836.1 million, compared with the year-ago period, as sales slipped 4.5 percent to $18.4 billion.

Net income plunged 57.4 percent to $234.1 million.

The Tires group achieved a 17-percent increase in EBITDA for the first six months to $1.16 billion, despite 3.4 percent lower sales to $6.22 billion.

Sales in the OE business were "considerably lower" than in the same period last year due to weak vehicle production, the company said.

By contrast, sales in the passenger car replacement tire business edged up year-over year, particularly in Europe and the Asia-Pacific region.

Sales in the commercial tire business also decreased.

For the full fiscal year, Continental adjusted its outlook to reflect lower estimates for automotive production.

The group now expects consolidated sales of $37.2 billion to $39.5 billion, compared to the previously announced estimate of $38.1 billion to $40.9 billion, with adjusted EBIT margin unchanged at 6 percent to 7 percent.

For the tires group sector, Continental now anticipates sales of $12.5 billion to $13.5 billion, down slightly from the previous estimate of $13.0 billion to $13.9 billion. Segment adjusted EBIT margin remained unchanged at 13 percent to 14 percent.