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FRANKFURT (dpa-AFX) - Weak margins and free cash flow well below estimates at automotive supplier and tire manufacturer Continental spooked investors on Wednesday. Later in the morning, the shares lost 4.0 percent to €65.54 as the Dax loser. However, they had also performed better than average since the start of the year, with a gain of around 22 percent by the time the key data was presented, stronger than the Dax's 9 percent gain.

RBC analyst Tom Narayan spoke of a warning from the company in view of the key figures presented for the full year. He said Conti had announced preliminary figures because free cash flow (FCF) differed significantly from the company's previously published forecast and the average analyst estimate. Instead of free cash flow for 2022 of 600 to 800 million euros, Conti now expects only 200 million, he said. The consensus had been 530 million. He had therefore expected a negative share price reaction.

Analyst Philipp Konig from US investment bank Goldman Sachs also explained the presentation of key figures with the weak cash flow. However, he said that the company had claimed lower-than-expected cash inflows in the group as the reason for missing the forecast, so he assumed that this was mainly due to delayed payments from carmakers and tire dealers, which should be made up in 2023.

Analysts Marc-René Tonn of Warburg Research and Himanshu Agarwal of Jefferies also primarily highlighted the weak cash inflow. However, Conti's target for the ratio was "already considered ambitious," Tonn wrote, and Agarwal also believes that falling below it should not have come as a real surprise.

However, Tonn says that the margins in the automotive supply business, which are down compared to the previous quarter, and the weak margins in the Contitech plastics technology division need to be explained. He therefore believes that after the strong share price gain since the beginning of the year, a further rise would require increasing confidence that the company can restore profitability in the auto division while maintaining strong profitability in the tire business./ck/men/jha/