Continental announces that the company has well achieved its financial targets in the past fiscal year.
The stern geopolitical situation, additional inflation-related costs of around €1.4 billion, exchange-rate effects and high costs for special freight all had a considerable impact on performance.
Continental also presented its strategy for increasing value creation and achieving its mid-term targets at its Capital Market Day in December 2023.
For the current fiscal year, the technology company is targeting an increase in sales and earnings (consolidated sales: around €41.0 billion to €44.0 billion, adjusted EBIT margin: around 6.0 to 7.0 percent). Continental expects the margin to improve further, particularly in the Automotive group sector, thanks mainly to the cost-cutting measures, price adjustments and efficiency improvements adopted last year. The goal is also to achieve above-market growth.
“The past fiscal year posed major challenges for us with geopolitical uncertainties, persistent strains on the supply of semiconductors, and inflation,” said Continental CEO Nikolai Setzer at the annual press conference in Hanover on Thursday, adding: “We achieved our goals for 2023 and made improvements toward achieving our mid-term targets, despite the challenging conditions. For this, my special thanks go to our around 200,000 employees worldwide. I’m proud of our team, because together we made substantial progress. In 2024, we will once again tackle the challenges facing us head-on and pursue our goals for the year with determination.”
In the past fiscal year, Continental achieved consolidated sales of €41.4 billion (2022: €39.4 billion, +5.1 percent). Net income increased to €1.2 billion in 2023 (2022: €67 million, +1,635 percent).
“Thanks to an improvement in operating earnings and a reduction in inventories and receivables, we significantly increased our adjusted free cash flow. We therefore slightly exceeded our cash flow target, which speaks to our financial strength,” said Continental CFO Katja Garcia Vila.
Market outlook and forecast for fiscal 2024
In 2024, Continental expects the global production of passenger cars and light commercial vehicles to change by -1 to 1 percent. Last year, this increased by almost 10 percent compared with 2022 to more than 90 million vehicles. For the global tire-replacement business, the technology company expects sales volumes to develop by 0 to 3 percent.
Continental expects the Automotive group sector to generate sales of around €20.0 billion to €22.0 billion and an adjusted EBIT margin of around 3.0 to 4.0 percent.
Continental forecasts sales of around €14.0 billion to €15.0 billion for the Tires group sector and an adjusted EBIT margin of around 13.0 to 14.0 percent.
Continental anticipates sales in the ContiTech group sector of around €6.6 billion to €7.0 billion and an adjusted EBIT margin of around 6.5 to 7.5 percent.
“In the current year, we are targeting an increase in sales and in the adjusted EBIT margin for the Continental Group. Despite high special expenses, we expect the corridor for adjusted free cash flow to be only slightly below that of the previous year,” said Garcia Vila.
In the Automotive group sector, sales increased by 10.8 percent to €20.3 billion (2022: €18.3 billion). Automotive significantly increased its adjusted EBIT margin compared with the previous year to 1.9 percent (2022: -0.3 percent). The improvement in earnings was attributable in particular to higher production efficiency thanks to a more stable material supply, strict cost discipline and a lower special freight volume.
In addition, Continental further increased order intake in the Automotive group sector. The technology company generated orders worth around €27.1 billion last year, confirming its strong position in terms of purchase-relevant future technologies. Year-on-year, the order volume increased by around 16 percent (2022: more than €23 billion).
Continental has also established a strong position in the tire original equipment segment for electric vehicles. The 10 highest-volume manufacturers of electric vehicles currently go for Continental tyres said the official release.
