Analysts: Conti’s rubber outperformance is good, but guidance is in line

Financial analysts have offered their response to Continental’s second quarter financial results, welcoming outperformance (particularly in the tyre division), but also pointing out that increases in guidance simply bring the firm in line with consensus expectations.

Sales revenues of 8.528 billion euros were said to have been 2 per cent below consensus estimates. Unusually the miss was felt in both automotive and rubber divisions, with both reporting figures 2 per cent behind consensus expectations.

At the same time Continental’s second quarter pre-tax profits (EBIT) were said to have been 4 per cent shy of consensus. According to a Morgan Stanley investor’s note dated 31 July the 4 per cent miss was made up of an 11 per cent underperformance (compared with the analysts’ consensus). However the rubber demonstrated it’s strong continually profitability with and 2 per cent outperformance of expectations.

At the same time adjusted EBITA of 1,005 million euros was said to be “in line”, with margin of 11.8 per cent marginally ahead of estimates of 11.6 per cent. According to this metric the automotive division was 3 per cent below expectations. Morgan Stanley reports that this decline was driven by weaker results in the Chassis & Safety and Powertrain divisions, offset by a better Interior division result. Again the Rubber division was 2 per cent ahead of expectation, driven by better tyre results.

Conti executives may have raised their full-year guidance, but with them now quoting adjusted EBIT margin of around 11 per cent against a previous figure of “>10.5 per cent” and a consensus of 11.5 per cent, the analysts are clearly already there.

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