Con­ti­nen­tal shares plunge on car-parts maker profit alert

Irish Independent - Business Week - - Front Page - Elis­a­beth Behrmann

GER­MAN in­dus­trial gi­ant Con­ti­nen­tal shocked in­vestors for the sec­ond time this year as dis­ap­point­ing sales in China and Europe forced the carparts maker to cut its rev­enue fore­cast and spend­ing on new tech­nol­ogy weighed on prof­itabil­ity. The shares plunged the most since 2009.

The world’s sec­ond-big­gest au­to­mo­tive sup­plier ex­pects rev­enue of €46bn for the year, ex­clud­ing cur­rency ef­fects. It is €1bn lower than a pre­vi­ous tar­get, Con­ti­nen­tal said on Wed­nes­day. It also re­duced its fore­cast for oper­at­ing re­turn on sales to more than 9pc, down from a 10pc tar­get.

Con­ti­nen­tal’s sec­ond guid- ance cut this year high­lights the pres­sures on au­to­mo­tive com­pa­nies whose tra­di­tional busi­ness model is in flux. The man­u­fac­turer, which last month an­nounced sweep­ing changes to keep pace with the in­dus­try’s trans­for­ma­tion to elec­tric and self-driv­ing cars, said the cost of de­vel­op­ing new tech­nol­ogy for cus­tomers weighed on its busi­ness.

Shares in Con­ti­nen­tal fell 14pc to €160.20 each by 1:20pm in Frank­furt. A profit warn­ing so soon after an ear­lier fore­cast cut in April was a shock, Tim Schuldt, an an­a­lyst at Equinet, said by phone. (Bloomberg)

A tire at the Con­ti­nen­tal AG plant in Timisoara, Ro­ma­nia

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