HANOVER, Germany — Continental A.G.'s tire business suffered a 7% drop in pre-tax operating earnings (EBITDA) for the quarter ended June 30 to $735 million on 17% higher sales of $3.7 billion.
Over the first six months, earnings were up 4.5% to $1.57 billion on 18.5% higher sales of $7.3 billion.
First half sales volumes, both for OE and replacement markets, were down however, due to COVID lockdowns in China and the war in Ukraine.
In the commercial vehicle tire business, sales figures were on par with those reported a year ago, while electric vehicle tires market grew.
Conti reported 35.3% higher tire business revenue of $2.19 billion in North America in the first six months of 2022 versus the same period a year earlier.
Based on the first-half performance and the firm's assessment of the economy in the second half, Continental raised its expectations for the tire business for the full year from earlier forecasts by nearly 3% to between $15 billion and $15.5 billion, while at the same reducing the adjusted EBIT margin outlook a point and a half to 12% to 13%.
Overall, Conti reported 20.7% lower operating income over the first six months of 2022 and "hurricane-like" headwinds in the second half of the year. Despite these, Conti management expressed optimism for the remainder of the current fiscal year.
During the January-June period, Conti's operating earnings fell to $1.95 billion, on 10.6% higher sales of $20.5 billion, dropping the earnings ratio to nearly four full points to 9.5%.
In particular, Continental said that geopolitical uncertainties resulting from Russia's war with Ukraine; disrupted supply chains; "massive" price increases for raw materials, semi-finished products, energy and logistics, as well as a COVID resurgence in China had "heavily affected" its results.
"The current headwind is rather like a hurricane and will not subside any time soon. Given this environment, we have performed well and become more resilient," Duerrfeld said.
In the second half of the year, Continental said it anticipates a stabilization of global supply chains, a slight improvement in the availability of semiconductors and continued stable energy supplies in Europe, and particularly in Germany.
