Continental revises 2021 outlook
In light of a range of factors such as ongoing semiconductor supply issues and supply chain uncertainties, Continental has adjusted its outlook for the 2021 fiscal year. Assuming exchange rates in Q4 2021 don’t materially differ to those on 30 September 2021, Continental expects consolidated sales of approximately €32.5 billion to €33.5 billion (as opposed to the projected figure of €33.5 billion to €34.5 billion announced on 5 August) and an adjusted EBIT margin in the range of approximately 5.2 to 5.6 per cent (previously 6.5 to 7.0%).
Sales within the Rubber Technologies business are expected to be approximately €17.2 billion to €17.5 billion (previously €17.2 billion to €17.8 billion) with an adjusted EBIT margin in the range of approximately 12.3 to 12.7 per cent (previously 12.5 to 13.0%). The adjusted EBIT margin range anticipates higher year-on-year raw material costs of around €550 million (previously €500 million) as well as higher costs for energy and logistics. These effects will predominately affect the Tires business area.
Continental anticipates sales of approximately €14.5 billion to €15.0 billion (previously €16.0 billion to €16.5 billion) within its Automotive Technologies business. These lower projected sales are linked to an adjusted EBIT margin in the range of approximately -2 to -2.5 per cent (previously 0.5 to 1.0%). This outlook continues to take into account the additional logistics expenses caused by semiconductor supply constraints, an issue expected to cost some €200 million. Additional research and development expenses in the Autonomous Mobility and Safety business area are expected to be about €100 million to €150 million (previously €150 million to €200 million).
For Contract Manufacturing, Continental expects sales of approximately €800 million to €900 million and an adjusted EBIT margin of approximately nine per cent.
Capital expenditures before financial investments are expected to be approximately six per cent of consolidated sales (previously 7%). Free cash flow before acquisitions, divestments and carve-out effects for continuing and discontinued operations is expected to be in the range of approximately €800 million to €1.2 billion (previously €1.1 billion to €1.5 billion for continuing operations).
Sales & margins lower in Q3 2021
Continental will release the quarterly statement for the third quarter of fiscal 2021 on 10 November, but has reported the following key financial results based upon preliminary data:
Consolidated sales of the Continental Group were €8.041 billion (Q3 2020: €8.679 billion) and the adjusted EBIT margin was 5.2 per cent (Q3 2020: 8.4%). Year-on-year sales growth before changes in the scope of consolidation and exchange-rate effects was -8.5 per cent.
Sales in Rubber Technologies were €4.385 billion (Q3 2020: €4.333 billion) and the adjusted EBIT margin was 11.3 per cent (Q3 2020: 15.0%). Year-on-year sales growth before changes in the scope of consolidation and exchange-rate effects was +0.5 per cent.
Sales in Automotive Technologies were €3.477 billion (Q3 2020: €4.132 billion) and the adjusted EBIT margin was -2.3 per cent (Q3 2020: 1.9%). Adjusted EBIT benefitted from a one-time positive effect of approximately €60 million related to the spin-off of Vitesco Technologies, while additional expenses for research and development in the business area Autonomous Mobility and Safety were about €30 million. Year-on-year sales growth before changes in the scope of consolidation and exchange-rate effects was -17.3 per cent.
Sales in Contract Manufacturing amounted to €203 million and the adjusted EBIT margin was 11.9 per cent.
Capital expenditures before financial investments was €484 million (Q3 2020: €368 million). Free cash flow before acquisitions, divestments and carve-out effects for continuing and discontinued operations amounted to €12 million (Q3 2020: €1.783 billion) in the third quarter and €1.008 billion for the first nine months of fiscal 2021 (9M 2020: -€197 million). Net indebtedness as of 30 September 2021 was €3.964 billion.