- Continental’s adjusted EBIT margin for the first quarter increased to 6% from 2.1% last year, exceeding the estimate of 5.23%.
- The Automotive sector showed improvement with an adjusted EBIT margin of 1.6%, a significant recovery from last year’s -4%, and better than the estimated 0.22%.
- Tires sector performance was strong with a 13.4% adjusted EBIT margin, up from 11.7% last year, surpassing the 13.1% estimate.
- ContiTech’s adjusted EBIT margin slightly improved to 5.4% from 5.3%, aligning with the estimate of 5.23%.
- Overall sales reached €9.7 billion, slightly above the €9.63 billion estimate.
- Automotive revenue remained stable at €4.8 billion, as expected, surpassing the estimated €4.71 billion.
- Tires revenue increased by 3% to €3.4 billion, higher than the €3.38 billion estimate.
- ContiTech revenue declined by 6.3% to €1.5 billion, just below the estimated €1.59 billion.
- Adjusted EBIT nearly tripled to €586 million from €201 million last year, beating the €503.5 million estimate.
- Net income turned positive at €68 million from a €53 million loss last year, though well below the expected €239.5 million.
- Negative adjusted free cash flow worsened by 72% year over year to €304 million.
- Continental’s annual forecast anticipates:
- Automotive adjusted EBIT margin between 2.5% and 4%, aligning closely with the 2.89% estimate.
- Tires adjusted EBIT margin ranging from 13.3% to 14.3%, near the 13.7% estimate.
- ContiTech adjusted EBIT margin between 6% and 7%, close to the 6.27% estimate.
- Projected automotive revenue of €18 billion to €20 billion, slightly below the €19.44 billion estimate.
- Tires revenue forecast between €13.5 billion and €14.5 billion, near the €14.14 billion estimate.
- ContiTech revenue projection of €6.3 billion to €6.8 billion, aligning with the €6.36 billion estimate.
- The planned spin-off of the Automotive group sector has led to the application of IFRS 5, affecting business segment accounting.
- Continental’s group outlook now primarily focuses on the Tires and ContiTech sectors, excluding the spin-off parts.
- The group forecasts consolidated sales between €19.5 billion and €21.0 billion, with an adjusted EBIT margin of 10.5% to 11.5%.
- No potential impacts from future trade restrictions have been included in the current year forecast.
Continental on Smartkarma
Analyst coverage of Continental on Smartkarma has been quite positive, with a recent report by Richard Howe titled “Reviewing the Demerger Arbitrage Setup for Continental AG.” In the report, Howe explains that Continental AG (XTRA: CON) has been on his watch list for the past 3 months due to the upcoming spin-off of its auto parts business. He believes that this transaction could create shareholder value, indicating a bullish sentiment. However, Howe mentions being hesitant to buy the stock immediately, citing two reasons for his caution.
Richard Howe‘s analysis sheds light on the potential for value creation through the demerger of Continental’s auto parts business, offering valuable insights for investors interested in the company’s stock. Smartkarma serves as a platform where top independent analysts like Howe publish their research, providing a valuable resource for those seeking in-depth analysis of companies such as Continental. This particular report offers a glimpse into the considerations influencing investment decisions regarding Continental AG, contributing to the ongoing discussion on the company’s future prospects.
A look at Continental Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 4 | |
| Dividend | 4 | |
| Growth | 3 | |
| Resilience | 3 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 3.6 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Continental AG, a global manufacturer of tires, automotive parts, and industrial products, has been evaluated using the Smartkarma Smart Scores. With strong scores in Value and Dividend at 4 out of 5, the company is seen as offering good value to investors and providing stable dividend payouts. Additionally, Continental received a solid score of 4 for Momentum, indicating positive market momentum.
Although scoring slightly lower in Growth and Resilience at 3, Continental still shows promise for long-term investment potential. Overall, with a mix of high and moderate scores across different factors, Continental is positioned for a steady outlook in the market, backed by its diverse product offerings and global market presence.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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