Continental (CON) Q2 2024 earnings summary

Executive summary

• Announced a 100% spin-off of the Automotive Group, targeting completion by end of 2025, creating two independent listed companies; no proceeds expected, with one-time costs in the low- to mid-triple-digit EUR million and a low-triple-digit EUR tax effect.

• Q2 2024 sales were EUR 10 billion, down from EUR 10.4 billion year-over-year, with negative organic growth of 3.1% due to weak industry and FX impacts.

• Adjusted EBIT margin rose to 7.0% in Q2 2024, up from 4.8% year-over-year, driven by cost discipline and finalized price negotiations.

• H1 2024 sales reached EUR 19.8 billion, down 4.5% year-over-year, with net income dropping 57.4% to EUR 252 million due to higher restructuring expenses and negative financial results.

• Free cash flow improved to EUR 147 million in Q2 but was negative EUR 940 million for H1, impacted by share buybacks, dividends, and working capital.

Financial highlights

• Q2 sales: EUR 10 billion, negative organic growth of 3.1%.

• Q2 adjusted EBIT margin: 7.0%, up from 4.8% year-over-year.

• Tires segment adjusted EBIT margin: 13.7% in Q2, H1 at 13.2%.

• Net indebtedness at EUR 5,601 million, equity ratio at 38.0%.

• Free cash flow positive EUR 147 million in Q2, negative EUR 940 million in H1.

Outlook and guidance

• 2024 group sales guidance revised to EUR 40.0–42.5 billion, adjusted EBIT margin 6.0–7.0%.

• Automotive sales guidance lowered to EUR 19.5–21.0 billion, margin 2.5–3.5%.

• Tires sales guidance at EUR 13.5–14.5 billion, margin 13.0–14.0%.

• ContiTech sales expected at EUR 6.6–7.0 billion, margin 6.5–7.0%.

• Adjusted free cash flow guidance at EUR 0.6–1.0 billion.