Continental AG posted consolidated net sales of around $11 billion during the third quarter of 2023, down 1.5% from prior-year levels.
The company's adjusted EBIT for the third quarter was $692.7 million, a 7.1% year-over-year increase.
"Continental ended the third quarter in line with expectations," say company officials.
"Our earnings were good in Tires and stable in ContiTech and we made progress in Automotive," where the company significantly increased its earnings "compared with the first half of the year. We will build on this in the fourth quarter and continue to improve."
Continental's fourth quarter focus will be on "increasing our earnings and further reducing inventories and receivables in order to achieve steady cash flow," says Continental Chief Financial Officer Katja Garcia Vila.
A look at Tires
Continental's Tires Group "had another good quarter," according to company officials, despite a year-over-year sales decrease. (The Tires division posted sales of $3.69 billion during the third quarter of 2023.) "At the same time, Tires was able to improve its earnings position by increasing its adjusted EBIT margin" to 13.2% versus 11.8% during 3Q 2022.
"This higher margin resulted primarily from the continued high share of premium tires, as well as lower raw material costs."
Continental launched a number of new tires in the U.S. market during the first nine months of 2023, including a new ultra-high performance tire within its General Tire brand, the G-MAX AS07
The tire replaces the existing General G-MAX AS05 and General Grabber UHP, combining them into one line.
More recently, Continental rolled out the new Continental brand Conti HSR 5 and Conti HDR 5, both developed for Class 4 and Class 5 trucks, plus two new General brand medium truck tires, the General RA 2, a regional all-position tire for regional/urban applications and the General RD 2, a regional drive tire, also used in regional/urban applications.
Continental also enhanced its suite of digital tire monitoring tools. In February 2023, the company unveiled ContiConnect Live, a cloud-based solution that provides real-time digital tire monitoring. Sensors track air pressure and temperature, among other metrics, transmitting the information from tire to a telematic unit or Bluetooth dongle and driver app. Data then goes to the ContiConnect Live web portal, where it can be viewed by computer or mobile device.
ContiTech and Automotive
The company's ContiTech business recorded another stable quarter, posting sales of around $1.8 billion and slightly better, year-over-year EBIT margin of 6.6%. "This was thanks to inflation-related price adjustments, in particular."
Continental's Automotive unit boosted its sales to $5.4 billion, a year-over-year gain of 1.8%. "With its sales growing organically by 5.1% before exchange rate effects and changes in the scope of consolidation and global automotive production rising by around 4%, the group sector slightly outperformed the market. The improvement in earnings resulted, in particular, from the price adjustments made in response to inflation-related additional costs of around ($1 million USD) for 2023. High cost discipline and stabilized supply chains also had a positive impact on earnings.
Overall car production
In its 3Q 2023 statement, Continental also provided a snapshot of global automotive production. "According to preliminary figures, the global production of passenger cars and light commercial vehicles amounted to around 22.3 million units in the third quarter of 2023. This was around the same level as the previous quarter and around 4% higher" than the same period last year.
For full-year 2023, Continental projects that passenger car and light commercial vehicle production will increase by 5% to 7% year-over-year.