Continental is forecasting lower sales for the full year as COVID-19 is weighing on demand.
The German company reports sales of £9.16 billion and adjusted EBIT of £740.04 for the third quarter.
The automotive supplier expects free cash flow to remain positive this year.
Continental AG (ETR: CON) revised its 2020 forecast on Wednesday and said that it now expects a lower adjusted profit margin and lower sales for the full year. In the previous year (fiscal year 2019) Continental AG had reported a net loss of 1.09 billion pounds sterling according to the report published in March.
Continental AG had opened Wednesday with a loss of more than 2.5% and lost another 1.5% in the next hour. In the year to date, the company’s shares on the stock exchange have fallen by around 10%, having recovered by almost 100% since their low in mid-March. Are you interested in investing in the stock market online? Here is a simple guide to help you get started.
Continental forecasts sales of 33.36 billion pounds sterling for fiscal 2020
Continental now forecasts sales of 33.36 billion pounds sterling for fiscal year 2020. It expects the adjusted EBIT margin (earnings before interest and taxes) for the full year to be around 3% this year. For comparison: in 2019, the automotive supplier had reported sales of 39.56 billion pounds sterling. Its adjusted EBIT margin last year was 7.4%.
The German company also stressed on Wednesday that additional costs and impairments, mainly attributable to restructuring, will impact its net profit and EBIT in the last quarter of 2020. Excluding carve-out effects and acquisitions, Continental said that free cash flow will remain positive this year, but is expected to be significantly weaker compared to 2019.
The automotive supplier had suspended its forecast for 2020 in early April this year due to the COVID 19 crisis, which has so far infected slightly less than 52 million people worldwide and caused more than 1.2 million deaths. Continental said at the end of October that it had acquired a stake in AEye to improve its autonomous vehicle technology.
Continental’s financial results for the third quarter
In the third quarter of the fiscal year, Continental’s consolidated sales were £9.16 billion, according to Continental, compared to higher £9.87 billion in the same quarter of the previous year. The German company printed reported an adjusted EBIT of £740.04 million in the third quarter, compared with £544.36 million in the same quarter last year. The adjusted EBIT margin for the final quarter was 8.1%, compared with 5.6% in the previous year.
Continental AG’s stock market performance was slightly down last year with an annual decline of around 7%. At the time of writing this report, the German multinational automotive supplier has a market capitalization of 18.73 billion pounds sterling.