HANNOVER (dpa-AFX) - The automotive supplier and tire manufacturer Continental wants to make its ailing automotive supplier division profitable again by cutting thousands of jobs. As of 2025, an annual cost reduction of 400 million euros is to take effect in the administrative area, as the DAX-listed company announced in Hanover on Monday. According to Conti, it is not yet clear exactly how many jobs will be affected. However, the number is likely to be in the mid four-digit range, it said. At the weekend, "Manager Magazin" reported that around 5500 jobs would be lost. That would be around five percent of the division's workforce.

Conti shares were up 1.8 percent at 64.50 euros in a friendly market at midday. This represents an increase of more than 15 percent in the current year, following a downward trend in previous years. The share was also worth significantly more this year at its high of over 79 euros in March.

Head of the division Philipp von Hirschheydt wants to streamline administrative structures and thus speed up decision-making processes. Among other things, business areas will be bundled more closely, with the previous six becoming five. At the end of September, the automotive supplier business had 102,574 employees, compared to 203,593 for the entire corporation. Continental plans to make all measures as socially responsible as possible, the company said.

Research and development expenditure will also be put to the test. Financial analysts have been criticizing the company's high expenditure ratio for some time now, indirectly criticizing the fact that not enough is being spent. Von Hirschheydt now wants to examine ways and means of increasing the efficiency of expenditure.

"These measures will increase efficiency and effectiveness and strengthen our competitiveness," said the manager. Conti has been in crisis in the automotive supply sector for some time and is struggling to make an operating profit in the business with - among other things - brakes, interior fittings, sensors and electronics.

Most recently, Conti was able to present black figures in the division for the third quarter in day-to-day business - that is, if certain write-downs on earlier acquisitions and other special factors are excluded. However, after factoring in special costs, the company again posted a loss before interest and taxes, albeit a small one. In terms of the adjusted operating result, Conti earned money for the last time to date in the 2019 financial year, and also posted an operating loss in the first half of this year.

Like others in the industry, Conti must also invest heavily in future technology, for example for autonomous driving and for the general expansion of software expertise. "Our goal is a sustainably profitable division that can make investments in its future under its own steam," said von Hirschheydt.

With the losses in recent years, the tire division often had to bring in the money in order to be able to finance the investments in the automotive supply business. For some time now, the tire division has been the profit generator in the Group with high and largely stable margins, even though the automotive supply business contributes the majority of sales.

Conti CEO Nikolai Setzer, who before Hirschheydt was in charge of the automotive supply business, is increasingly on the defensive as a result of the weak business. His predecessor Elmar Degenhart set up the last major cost-cutting program. It was intended to reduce the Group's annual gross costs by 850 million euros by this year. Apparently, it has not helped much in the automotive division.

At the beginning of next month (December 4), the Group intends to present its future strategic course to its long-suffering investors at a capital market day, at which point further details on the intended cost-cutting efforts are likely to be revealed.

Radical plans are being circulated in media such as "Manager Magazin" - Supervisory Board Chairman Wolfgang Reitzle sees Conti's future primarily in the tire and plastics technology sector - and no longer in automotive supply. The Group itself does not wish to comment on this in detail, stating that it is always the task of the Executive Board to examine the business units for sustainable success. Nevertheless, the company has admitted that the parts of the plastics technology division Contitech that supply the automotive industry are being put to the test.

In view of the sluggish car market in recent years, particularly for suppliers, high costs and the shift towards electric motors, the supplier industry is currently in a state of flux anyway. The rolling bearing and transmission manufacturer Schaeffler, for example, wants to take over the drive specialist Vitesco.

The deal would give the Schaeffler family of industrialists access to the Regensburg-based company's expertise in the growing field of electric drives. Conti is the former parent company of Vitesco - and the Schaefflers also have a major say in the Hanover-based company with a 46 percent shareholding./men/mne/mis