Continental AG reduced its sales target for this year as the recovery of the tire market in Europe is not as fast as expected, while growth in the US and Asia is seen slowing down.
Continental expects revenue this year to reach 34 billion euro, which represents an increase of 4% from last year, compared with the previous forecast of 5%. Profit during the second quarter increased 2%, thanks to lower raw-material costs and higher deliveries which offset losses in Europe. The company managed to partly bypass the sic consecutive quarters of losses in Europe, by following VW, BMW and Daimler into emerging markets such as the US and China.
“They are damping the expectations a little as the situation in Europe is likely to remain difficult for some time,” said Frank Biller, a Stuttgart, Germany-based analyst with LBBW. “The second quarter went quite well. Nearly all divisions slightly beat expectations.”
Chief Financial Officer Wolfgang Schaefer said that auto production in the European market is expected to stabilize during the second half of the year, while growth rates are seen slowing in the US and China. Second quarter EBIT increased to 883.2 million euro, compared with 866.2 million euro in 2012 and profit surpassed analysts’ estimates of 833.2 million euro. Sales increased 4.3% to 8.54 billion euro.