Conti expects 14% drop in rubber group sales for fiscal 2020

Continental A.G. expects its rubber business — which comprises tires and ContiTech divisions — to report a drop in sales of nearly 14% this year versus 2019.

The segment's adjusted pre-tax operating earnings (EBIT) margin is anticipated to be around 10.5%, compared to 12.5% in 2019, Continental stated in its third quarter financial report.

This is the first financial outlook Conti has issued since March, which it then withdrew due to COVID-19 pandemic uncertainties. The firm's executive board now sees itself in a position to provide an outlook for the remainder of the year.The company did not project tire division results separately.In its report, Conti said it expects consolidated sales to be off nearly 16% to $42 billion and the adjusted EBIT margin to fall to 3% from 9.3% last year.

The new outlook, Conti noted, is conditional on the assumption that exchange rates in the fourth quarter of 2020 do not materially differ to those as of Sept. 30 and that there would be no new unexpected impacts from the ongoing COVID-19 pandemic.

Conti said in its report it expects global production of passenger cars and light commercial vehicles will be down 4% to 6% from 2019, which would leave full-year production off by about 18% to 19%.

It said its full-year sales and earnings forecasts take into account the vehicle build, plus forecasts for the development of the replacement-tire markets, and assuming in particular no new, unexpected impacts from the ongoing coronavirus pandemic on production, the supply chain or demand.