HANOVER, Germany — Continental A.G.'s Rubber Group recorded a 2.1% decline in pre-tax operating earnings (EBITDA) to $1.72 billion for the first half of 2019, despite a 3.1% increase in sales revenue.
Segment sales rose to $9.89 billion, partially helped by currency impact and price/mix, Conti reported. The operating ratio fell slightly, to 17.4%.
In the tire division, revenue grew 4.9% during the six months to $6.41 billion, while pre-tax operating income rose 1.4% to $1.35 billion, yielding an operating ratio of 21.1%.
As a corporation, Conti suffered a 21.1% drop in adjusted pre-tax operating income (EBIT) of $2.02 billion on 0.3% lower sales of $25.1 billion.
"At present, our business is being influenced by the slowdown in global automotive production," Conti Chief Financial Officer Wolfgang Schaefer said, noting the company does not expect the headwind to ease in the second half.
"The company does not currently envisage a market upturn in the short to medium term," he added.
The firm earlier adjusted its outlook downward for fiscal 2019 in the wake of "continued decline" in the global production of passenger cars and light vehicles.
The company now anticipates that the production of passenger cars and light commercial vehicles will be down 2% in the U.S., 3% in Europe and 10% in China. Overall, the company is assuming that global vehicle production will fall by about 5% in 2019.
Noting that the automotive industry is undergoing a fundamental, dramatically accelerating and partly disruptive transformation worldwide, Conti's supervisory board and management have outlined a strategy for Continental to maintain its financial strength in the long term, increase its competitiveness and safeguard its viability.
The resulting need for action is being discussed with employee representatives, with the aim of drawing up a plan together in the coming weeks on how to proceed. The executive board and employee representatives will report on the results once an understanding has been reached, Conti said.