Continental bets on higher pricing as tyre replacement flat
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1970-01-01 08:00
BERLIN (Reuters) -Continental lowered its tyre sales outlook on Wednesday but kept its margin outlook unchanged as higher pricing and

BERLIN (Reuters) -Continental lowered its tyre sales outlook on Wednesday but kept its margin outlook unchanged as higher pricing and a focus on premium products boosted second quarter revenue.

The autos supplier expects tyres sales of 14-15 billion euros ($31.82 billion) from 14.5-15.5 billion previously, citing a declining market for tyre replacement in Europe and North America.

But the rise in costs on wages, salaries, logistics, energy and materials would be lower than previously forecast at 1.4 billion euros from 1.7 billion.

Higher logistics costs, which weighed on its automotive division this quarter, were a one-off, and logistics costs in the second half of the year should be lower than last year's, Chief Financial Officer Katja Duerrfeld said.

Continental needed to "make up considerable ground" in its automotive segment, it said in a statement, which fell short of expectations in the second quarter partly because of currency exchange effects and freight costs.

It was negotiating inflation-related price increases with customers for the second quarter, it added.

It confirmed its lower than expected adjusted earnings margin 4.8% on sales of 10.4 billion euros, as reported in preliminary results in July.

The automotive division's loss on its earnings margin of 0.6% was below the consensus of a 1% rise, despite meeting expectations for sales at 5.1 billion euros.

The company said it expects passenger car and light commercial vehicle production to rise 3-5% this year from a previous forecast of a 2-4% rise, but expects the global tyre replacement business to remain unchanged or decline by up to 2%.

Preliminary figures showed global passenger car and light commercial vehicle production grew by around 16% in the second quarter compared to last year, it added.

($1 = 0.9115 euros)

(Reporting by Victoria Waldersee, Editing by Friederike Heine and Barbara Lewis)

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