HANNOVER (dpa-AFX) - Tire manufacturer and plastics technology group Continental is aiming for improved operating results this year despite a challenging environment. Internal measures are expected to take effect, but falling raw material prices and an economic upturn among industrial customers in the second half of the year should also contribute, CFO Roland Welzbacher said on Wednesday, according to a statement. However, management has not factored in risks from the Middle East conflict. Despite a net loss last year due to accounting effects from the spin-off of the automotive supply business and from part of the plastics technology segment, the dividend is set to rise. Nevertheless, the stock fell.
After the market opened, the share dropped 2.5 percent to 65.56 euros. This extends the price decline since the outbreak of the Middle East conflict over the weekend to about 10 percent. The success story since the spin-off of the automotive supply unit under the name Aumovio has also dimmed somewhat – since the stock market spin-off of the former subsidiary, Conti shares are now still up around 16 percent.
According to analyst Michael Aspinall of U.S. investment bank Jefferies, Conti fell somewhat short of expectations with its targets for its most important division, tire manufacturing. It is questionable whether management has been cautious here. After the stock's strong run, a pullback was to be expected, Aspinall said.
The DAX-listed group expects an adjusted EBIT margin (before interest and taxes, excluding special effects) of 11.0 to 12.5 percent in the new year, according to the company from Hannover. Last year, the margin—as already largely known—fell from 11.0 to 10.3 percent. U.S. tariffs and exchange rates each weighed on results by more than 100 million euros, CFO Welzbacher said at the press conference.
But Contitech also performed unexpectedly weakly. For the division to be sold this year, Conti has already started cost-cutting and announced in November that it aims to reduce annual costs by 150 million euros from 2028 through job cuts.
CEO Christian Kötz expects sales to fall further this year to between 17.3 and 18.9 billion euros, partly due to tariff barriers. According to Welzbacher, the recent ruling by the U.S. Supreme Court on tariffs has no impact; the import duty on car tires remains at the increased 15 percent. Analysts had previously forecasted slightly higher sales and margin figures for the new year than the mid-point of Conti's targeted ranges. In 2025, revenue in the challenging environment fell by two percent to 19.7 billion euros, as previously reported.
In the end, Conti slipped into the red in 2025 due to special costs for the spin-off of the automotive supply business and for the now completed sale of part of the plastics technology division. Because the restructuring measures resulted in accounting charges of about 1.2 billion euros, a profit of 1.2 billion euros the previous year turned into a loss of 165 million euros.
Nevertheless, the dividend is set to rise from 2.50 euros to 2.70 euros. Conti had already indicated to investors that it would slightly increase the payout ratio after the Aumovio spin-off and would not take the accounting special charges into account. Without these special effects—which, according to Conti, do not affect the current free cash flow—the company would have continued to generate a profit./men/err/zb
