Continental will work harder on cost savings after posting a drop in adjusted profit and a €1.2bn net loss in 2019 as worldwide vehicle demand slumped.
Cost-cut plans will be presented in May because worldwide car production is expected to fall for the third year in row, by between two and five per cent, Continental CEO Elmar Degenhart says, adding that job cuts may be necessary. Analysts at Evercore ISI had harsh critiques for the supplier, calling Continental “a very large company which is not moving fast enough in this rapidly declining volume environment based on a legacy cost structure designed for volume growth,”
Adjusted earnings before interest and taxes fell 22% to €3.2bn in 2019. Full-year revenue came in at €44.5bn, up slightly from €44.4bn in 2018. Continental say they expect to deliver an adjusted EBIT margin of 5.5 to 6.5 per cent this year.
Degenhart said potential supply chain disruptions caused by coronavirus travel restrictions have been avoided by switching from shipping parts to using air freight, and he expects production and logistics to normalise in the second quarter.