Continental’s Tire Business Is ‘Strong’ So Far in 2023

Aug. 9, 2023

Despite the tough market environment, Continental AG credited the earnings from its tire business in the second quarter for its overall growth in the first half of 2023. Overall company sales increased in the quarter and for the half, as did tire sales.

The company says it is expecting overall passenger and light truck replacement tire volume in North America to “remain at around the previous year’s level” for 2023, “mainly due to an anticipated significant increase in the fourth quarter.”

Globally, Continental expects replacement passenger and light commercial tire volumes to be in the range of -2% to flat for the year. The company’s previous forecast expected an increase between 1% and 3%. While the forecasts for Europe and North America are both down for the year, the replacement tire market in China is expected to grow by 14%-16%, Continental says.

The outlook for medium truck tire sales in the North American replacement market has been lowered, too. Continental expects a drop in the 8% to 10% range “following two strong years of sales.” Its earlier forecast called for a drop between 2% and 5%.

Sales benefit from price-mix

Tire sales for the quarter totaled $3.76 billion, up from $3.54 billion. For the first half, sales totaled $7.53 billion, up from $7.00 billion.

Overall sales in Continental’s tire operations were up 3.7% in the first half, which the tiremaker attributed primarily to positive price-mix effects.

Continental says OE tire sales “were considerably higher than in the previous year in the first six months of 2023, due to a rise in vehicle production.” While replacement passenger tire sales were down in both Europe and North America “due to the consistently high inventories in trade and the price reduction anticipated on the market. Overall volumes were down 2.8% in the second quarter.

Commercial tire sales “were considerably lower.”

As the year goes on, Continental says It expects the negative effects of inflation to ease related to its tire business, as well as “slight cost reductions” related to the purchase of materials to produce tires.

For the year, Continental has decreased its forecast for tire sales slightly, from around $15.79 billion-$16.88 billion to $15.24 billion-$16.33 billion. The company has also lowered its overall guidance from $45.74 billion-$49.00 billion to around $45.19 billion - $48.46 billion.

Continental recorded total global sales of $22.57 billion for the first half, up from $19.69 billion for the first six months of 2022. Net income totaled $667.9 million for the half, up significantly from $6.6 million a year ago.