Continental Earnings Hit Four-Year High on Cost Cuts
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Continental AG more than doubled earnings in the first quarter as its car parts unit slashed costs and tire sales bounced back from weaker levels last year.
Adjusted group earnings grew to 586 million euros ($664 million), the best first-quarter result since 2021 and up from 201 million euros last year, Continental said May 6.
Stronger tire replacement demand across all regions this quarter helped offset lower car production in Europe and North America. The company’s auto unit was buoyed by head count reductions and other savings measures, as well as higher prices it negotiated with customers.
The stock has gained about 16% over the past year.
Continental is in the midst of an extensive overhaul to break up its three-pillar structure, including a spinoff of its auto parts unit. The company also plans to offload its ContiTech industrial division that makes products such as conveyor belts and agricultural hoses, leaving it with the more profitable tires business.
Uneven demand for electric cars, shrinking market share in China and the costs of dealing with rising trade barriers have put suppliers like Continental, Robert Bosch GmbH and Schaeffler AG in a bind as their carmaking customers cancel or delay orders and haggle over prices.
Continental left its outlook for its three divisions unchanged but said it couldn’t quantify the impact of U.S. tariffs due to changing policies and potential retaliatory measures. The company’s car parts and ContiTech units import more than half of their finished goods and raw materials from Mexico into the U.S., though nearly all of those comply with the USMCA trade pact, the company said.
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Continental’s consolidated sales were 9.7 billion euros, down slightly from the same time last year.
The company has already announced personnel cuts across its German sites, with the total now reaching more than 10,000. Labor representatives had warned against disrupting company structure further, demanding reliable prospects for workers.
Prior to its overhaul, Continental faced a series of issues, including a raid by European officials last year over suspected price fixing and quality issues, including a faulty brake system supplied to BMW AG.
