Continental (CON) Q3 2024 earnings summary

Executive summary

• Q3 2024 consolidated sales declined to €9.8 billion, down 4.0% year-over-year, but adjusted EBIT rose 36.0% to €873 million (8.9% margin), and net income increased to €486 million from €299 million, driven by cost savings, improved pricing, and a €125 million one-time inflow from Vitesco Technologies.

• Automotive and Tires segments delivered strong profitability, while ContiTech continued to face weak industrial and automotive demand.

• Automotive restructuring and cost reduction measures are progressing, with over 3,000 headcount reductions year-to-date and 90% of pricing negotiations finalized.

• Strategic progress includes preparing Automotive for a potential spin-off by end of 2025 and advancing the independence of ContiTech's OESL business.

• Free cash flow was €323 million, impacted by working capital build-up and restructuring outflows, but aided by the Vitesco inflow.

Financial highlights

• Adjusted EBIT margin improved to 8.9% from 6.3% in Q3 2023; net income attributable to shareholders was €486 million, up from €299 million.

• Tires achieved 3.5% organic sales growth and a 120 basis point increase in adjusted EBIT margin compared to Q3 2023.

• Automotive segment improved adjusted EBIT margin to 4.2% despite weak global production volumes.

• Net indebtedness reduced to €5,349 million from €5,715 million year-over-year; gearing ratio at 37.7%.

• EPS (excluding PPA) was €2.53 in Q3 2024, up from €2.43 in Q3 2023.

Outlook and guidance

• 2024 group sales expected at €39.5–42.0 billion, with adjusted EBIT margin of 6.0–7.0%.

• Automotive sales forecast at €19.5–21.0 billion (adj. EBIT margin 2.5–3.5%), Tires at €13.5–14.5 billion (13.0–14.0%), ContiTech at €6.2–6.6 billion (5.8–6.3%).

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

• Tax rate for 2024 expected at 30% due to country allocation and ongoing Italian tax investigations.

• Market outlook remains cautious, with vehicle production and industrial markets expected to contract or stagnate in key regions.