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Continental Lowers Outlook for 2018 Due to 1Q Tire Business

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Continental AG is downgrading its outlook for 2018 due to the performance of its tire business so far this year.

On April 18 the company said, "Exchange rate and inventory valuation effects will impact earnings by around 150 million euro in (the first half of) 2018. This negative impact affects primarily the tire business.

"At present, we do not assume that we will be able to compensate for these negative effects in the Rubber Group over the course of the year. We are therefore lowering our outlook for the adjusted EBIT margin of the Rubber Group from about 15% to more than 14% for 2018."

Continental says the adjusted operating result (adjusted EBIT) for the Rubber Group in the first quarter of 2018 will be about 100 million euro lower than the first quarter of 2017.

The news comes about six weeks after Continental released preliminary data on its 2017 results, and said the overall company had increased sales by 8.5% to 44 billion euros — and had surpassed its targets for the year.

On March 8 Continental Chairman Elmar Degenhart said he expected the profitable growth to continue in 2018:

“The start we have made to fiscal 2018 has confirmed our expectations. We are therefore reaffirming our outlook from early January. We intend to continue our successful course of growth and profitability. For the current year, we are still anticipating a significant rise in sales of just under 7% to approximately 47 billion euro before exchange-rate effects, with an adjusted EBIT margin of around 10.5 percent. This is based on growth in the global production of passenger cars and light commercial vehicles of more than 1% to 96.5 million vehicles.”

Continental will publish initial data for the first quarter of 2018 during its annual shareholders meeting April 27, 2018. The full financial report for the first quarter will be published May 8, 2018.

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