Continental suspends production at its factory in Russia

During Continental’s year-end earnings call on March 9, CEO Nikolai Setzer announced that the company would suspend tire production at its plant in Kaluga, western Russia. Setzer said, “We made this decision as a result of the war” and promised to support not only the 1,300 employees affected by the closure, but also its Ukrainian employees and those from neighboring countries.

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“It’s hard for me to find the right words for something that we and many others never thought possible,” Setzer said. “There is still a war in Europe. Since the Second World War, we have lived in peace and stability. The attack on Ukraine has shaken us all to the core. Our hearts go out to all those affected and their loved ones. »

Setzer added that Continental made a donation to the United Nations Refugee Agency and stressed that the safety and security of its employees is its highest priority.

Setzer and Katja Dürrfeld, CFO of Continental, reviewed Continental’s 2021 results and outlook for 2022. Dürrfeld shared that if “the geopolitical situation, especially in Eastern Europe, remains tense or even worse, it may lead to long-lasting disruptions, especially for production supply chains and demand. Depending on the severity of the disruption, it may also lead to lower sales and profits across all areas of the group.”

Despite a choppy market in 2021, Continental performed well and achieved a positive net result. The coronavirus pandemic, weak automotive production due to shortages of electronic components as well as significant cost increases in the areas of supply and logistics have had a particularly large impact on sales and profits, the company said. . It nevertheless achieved its adjusted annual objectives. With its realigned strategy and corresponding market-oriented structure, the company has also strategically defined its course for the future.

Contents 2021

According to preliminary figures, Continental’s consolidated sales for 2021 totaled 33.8 billion euros (about $37.12 billion), an increase of 6% over 2020 sales of 31.9 billion euros (about 35 billion dollars). Before consolidation scope changes and currency effects, sales were up 7.4%, the company said. In a still challenging market environment, the company said it achieved adjusted EBIT of €1.9 billion (approximately $2.09 billion) in 2021, an increase of 37.7% from 1, €4 billion (approximately $1.54 billion) in 2020, corresponding to adjusted EBIT. margin of 5.6%.

“While the low level of production around the world had a negative impact, in particular on our automotive business, our Tires and ContiTech businesses performed well despite massive cost increases in the areas of supply and maintenance. logistics,” Setzer said.

After a negative net profit the previous year resulting from expenses incurred and depreciations on property, plant and equipment, Continental posted a net profit of 1.5 billion euros (1.65 billion dollars) in 2021, compared to a loss of 962 million euros (about 1.1 billion dollars). ) in 2020. Free cash flow before acquisitions, divestitures and carve-out effects for continuing and discontinued operations amounted to €1.2 billion (approximately $1.3 billion)

Forecast 2022

Excluding risks related to the war in Ukraine, Continental expects global production of passenger cars and light commercial vehicles to increase by 6-9% in 2022. In 2021, this year-on-year increase another only increased by around 3% to around 77 million vehicles. due to semiconductor shortages, the company said. The company also expects supply and logistics costs to increase by about 2.3 billion euros (about $2.5 billion).

Based on Continental’s assumptions about trends in its markets and industries for 2022, the company forecasts consolidated sales of approximately 38-40 billion euros ($32.95-43.93 billion) and adjusted EBIT margin of around 5.5 to 6.5%. Continental, however, expects business to gradually improve after a lackluster start to the year.

Specifically for the tire cluster business, Continental expects sales of between approximately 13.3 billion euros and 13.8 billion euros (approximately $14.6 billion to $15.16 billion) with an adjusted EBIT margin of between between 13.5 and 14.5%.

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