Continental AG sees solid demand for auto parts continuing even as inflation and rising interest rates hit the industry.
(Bloomberg) — Continental AG sees solid demand for auto parts continuing even as inflation and rising interest rates hit the industry.
The manufacturer’s third-quarter operating earnings jumped after it won more orders from auto manufacturers and raised prices to offset rising costs for energy and raw materials.
“We don’t see any severe issues in our order book coming up,” Chief Financial Officer Katja Duerrfeld said in an interview with Bloomberg Television, adding that Continental will continue to address cost issues with auto customers.
The auto industry is navigating cost pressures and rising rates, but demand has been relatively resilient so far. That’s partly due to backed-up order books as manufacturers struggle to secure enough chips. Continental last month won more than €2 billion in display orders from carmakers as the industry accelerates a shift to electric vehicles.
Continental rose as much as 5.4% in Frankfurt. The shares are down some 38% this year.
Cost Cuts
Suppliers have increased cost-cutting efforts. Continental has achieved around 50% of the headcount reductions targeted in its 10-year program, Duerrfeld said, in part by retraining employees or shifting them to different roles. While the company has no plans to expand the program, it will “take measures as needed” depending on how the economy develops, she said.
Continental warned that geopolitical uncertainties, supply-chain issues and energy inflation are weighing on business.
The manufacturer also cautioned that third-quarter results were not in line with its medium-term financial targets. It reported a net loss and negative adjusted free cash flow in the period.
Continental has had to deal with a few setbacks recently, including having to halt production of industrial hoses over quality-control issues. Earlier this week, the company confirmed that data was stolen in an August cyberattack.
–With assistance from Tom Mackenzie.
(Updates with CFO comment in third paragraph.)
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