HANOVER, Germany — Continental A.G. has revised downward its financial outlook for the year for a second time, due mainly to lower sales, higher costs and warranty claims.
The company said it expects its pre-tax operating earnings ratio to drop a full point, to about 9 percent, and for its sales to fall about 2 percent shy of earlier projections.
Lower-than-expected demand in the original equipment business, particularly in Europe and China in the automotive and ContiTech divisions, are contributing to the lower sales guidance.
Additionally, weak demand in the tire markets in both regions has led to lower sales expectations.
The company also noted high development costs within the Automotive Group, due to high order intake of around $23.5 billion in the first half of the year.
Start-up costs in the ContiTech division and transition to products systems for hybrid and electric vehicles in the powertrain sector also contributed to higher costs.
Conti said it has responded by "initiating measures to cut production costs," while adapting its planned investments to lower sale expectation.
The sales forecast for the Rubber Group has been dialed back by nearly 5.5 percent to about $20.5 billion. This revision includes a negative exchange-rate effect of about $588 million.
Adjusted EBIT margin of the Rubber Group has been revised down a full point to more than 13 percent.
Continental will publish the results for the first nine months of fiscal 2018 on Nov. 8.