MUNICH, Germany Automotive tier one Continental AG has managed to just keep its adjusted operating figures positive in the first half of the year, but under the bottom line the company made a hefty loss. The outlook is very cautious.
How bad the first quarter was for the company and probably automotive suppliers in general may be seen by the fact that of the 88.4 million profit for the Chassis & Safety division achieved during H1, 87.4 million have been made in the second quarter. Thus, the change between first and second quarter has been dramatic.
All in all, the adjusted operating profit (EBIT) for the Automotive group swung into negative territory from 371 million in the first half of 2008 to -441 million in the same period in 2009. Sales dropped by 37 percent to 5.36 billion. The Automotive group integrates the Chassis & Safety division, the Powertrain division and the Interior division.
While the company's Chassis & Safety division remained profitable on an operating (EBIT) basis, the Powertrain division the Powertrain division quintupled its loss from 49 million in 1H2008 to 253 million. The interior division swung from a 128 million profit to a loss of 244 million in the same period.
Under the bottom line and including the non-electronics activities, the company wrote a net loss of 457 million. Accordingly, the words "crisis" and "difficult" are spread generously over the report. Continental CEO Karl-Thomas Neumann pointed out that the economic crisis with its persistently obvious impact continues to prevail. "Given the fragile status of the global economy, it is difficult to make a forecast for the remainder of the year," he said.
Nevertheless, there are silver linings at the horizon. Neuman also pointed out that the reduction of inventories generates hope for a business revival during the second half. His hint at ongoing restructuring processes however did not let much space for hopes to regain profitability very soon.
Continental rolls fuel and emission optimization strategy
German automotive industry embraces e-car, but . . .
Automotive electronic systems market to fall 15%, says analyst