Continental says Q1 profit better than expected
Continental announced its key figures for the first quarter of fiscal 2020 based on preliminary data. The results are above the company’s expectations as announced on April 1, 2020, as well as the current average estimates of analysts.
Consolidated sales were €9.8 billion (prior year: about €11 billion) and the adjusted EBIT margin was 4.4 percent (prior year: 8.1 percent). Year-on-year organic growth (adjusted for changes in the scope of consolidation and exchange-rate effects) was -10.9 percent. (In comparison: early in April Continental had expected consolidated sales of around €9.4 to €9.8 billion and an adjusted EBIT margin of around 2 to 3 percent for the first three months of the year.)
Sales in the Automotive Technologies group sector were €4.1 billion (prior year: €4.7 billion) and the adjusted EBIT margin was 1.8 percent (prior year: 6.0 percent). Organic sales growth came to -11.5 percent.
The Rubber Technologies group sector achieved sales of nearly €4 billion (prior year: €4.4 billion) and an adjusted EBIT margin of 9.8 percent (prior year: 12.2 percent). Organic sales growth was -10.8 percent.
Sales in Powertrain Technologies were €1.8 billion (prior year: about €2 billion) and the adjusted EBIT margin was 0.7 percent (prior year: 3.9 percent). Organic sales growth was -9.1 percent.
In the first quarter of 2020, free cash flow before acquisitions and carve-out effects amounted to €59 million (prior year: -€580 million) The improvement versus the prior year period was primarily due to a lower level of cash outflow for working capital, the cash inflow from the sale of the 50-percent stake in SAS Autosystemtechnik GmbH, and a reduced level of investments.
As at March 31, 2020, Continental had cash and cash equivalents of more than €2.5 billion and committed unused credit lines of more than €4.3 billion.
Continental says the economic environment continues to be characterized by substantial uncertainty regarding the duration and severity of the disruptions: “It thus remains difficult to gauge possible further adverse consequences on production, the supply chain and demand Continental is currently still refraining from providing an outlook for the 2020 business year.”