Continental profit hit by demand, emissions rules
Continental AG (CON.XE) said Thursday that third-quarter net profit slumped, hit by slowing demand in global auto markets and the effects from new emissions-testing rules.
Net profit for the quarter fell 14% to 626.1 million euros ($717.3 million) from EUR729.1 million a year earlier. Revenue edged 0.9% higher to EUR10.79 billion.
Earnings before interest and taxes dropped 18% to EUR851.6 million.
The results come on the back of the German auto supplier’s profit warning in August, the second this year. Manufacturers have had to struggle with slowing demand in some major markets, as well as continued trade disputes and new stricter emissions-testing standards, which hit car makers’ sales and earnings and led several suppliers to warn on profits.
Despite the gloomy market environment, Continental backed its guidance, said Chief Executive Elmar Degenhart.
The company said it expects the market environment to remain weak in the fourth quarter however. If the negative trend accelerates in the fourth quarter, it could pose "a certain risk" for its full-year sales target, Continental added.
"The market environment is becoming increasingly difficult. In the last quarter, we saw the first substantial decline in global vehicle production in almost 10 years," said Chief Financial Officer Wolfgang Schafer.
Production declined significantly in Europe and China, which together account for more than half of global vehicle production, he said.
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