Continental AG stock rises following solid Q2 results

Investing.com -- Continental AG (ETR:CONG) shares jumped on Wednesday following its second quarter results which met expectations despite a downward adjustment to its full-year outlook. 

At 4:13 am (0813 GMT), Continental AG was trading 5.2% higher at €57.17. 

The company reported group revenue of €10,003 million, slightly missing the latest VisibleAlpha consensus by approximately 3.4%. However, the group’s adjusted EBIT of €704 million matched Stifel's forecast and exceeded consensus estimates by about 2.6%.

The automotive division demonstrated considerable improvement compared to the previous quarter. Auto revenue declined by 3.4% year-over-year (down 2.2% organically), coming in around 4% below VisibleAlpha consensus. 

Nonetheless, the auto adjusted EBIT of €133 million, which represents a 2.7% margin, was in line with consensus but fell short of Stifel’s forecast by €40 million. The division benefited significantly from concluded price negotiations with OEMs, contributing to a notable improvement in margins. 

“We also estimate that the company achieved c€50m in cost benefits from the ongoing €400m fixed cost reduction programme in the quarter,” analysts at Stifel said. 

The tires segment also showed resilience, with second quarter revenue falling 2.5% short of consensus but achieving an adjusted EBIT of €498 million (14.7% margin), which was approximately 3% ahead of consensus estimates. 

Volume growth was modest at 0.2% year-over-year, while price/mix was slightly negative due to OE price indexation. 

Looking ahead to 2H24, Stifel anticipates gradual improvements in price/mix as the headwinds from OE price indexations diminish.

Continental AG has revised its FY24 guidance in light of weaker market conditions. The company now projects group revenue in the range of €40-42.5 billion, down from the previous guidance of €41-44 billion. 

Specifically, auto revenue is now expected to be between €19.5-21 billion (reduced from €20-22 billion), and tires revenue is forecasted at €13.5-14.5 billion (previously €14-15 billion). 

The company has also adjusted its margin outlook for auto to 2.5-3.5% (from 3-4%) and for ContiTech to 6.5-7% (unchanged). 

These adjustments are primarily due to weaker market conditions and lower expected volumes, though Continental AG remains confident in its price and cost reduction strategies.

Stifel values Continental AG based on FY24E target multiples, with automotive technologies at 9.3x EV/adj. EBIT, Tires at 9.5x EV/adj. EBIT, and ContiTech at 8x EV/adj. EBIT. 

The company's valuation is underpinned by its focus on high-growth areas such as autonomous mobility and vehicle networking, alongside a resilient tires/rubber business that generates strong cash flows.

 

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201)

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: