Continental Delivers Stark Message to Managers to Shape Up
(Bloomberg) -- Continental AG executives have warned managers to shape up or the German car-parts maker could be in big trouble.
In a letter to roughly 400 managers seen by Bloomberg, Chief Executive Officer Elmar Degenhart and seven other top executives wrote that the world’s second-biggest automotive supplier was on the wrong track and “the train stops right here and now.” The shares fell to their lowest level in almost four years.
The move comes after the Hanover-based company shocked investors in August with a second profit warning this year. Continental cut its full-year revenue outlook following disappointing sales in China and Europe. The manufacturer, which has announced sweeping changes to keep pace with the industry’s transformation to electric and self-driving cars, said high costs for developing new technology for its customers were weighing on its business.
In the letter to managers, executives said roughly half a dozen units are missing their internal targets, and getting beaten by competitors. Local German newspaper Hannoversche Allgemeine Zeitung first reported the remarks.
“Our entire organization is suffering acutely from this loss of trust and value,” the executives wrote. “This situation is unacceptable. By no means will we simply return to the agenda.”
Continental’s struggles highlight the pressures felt by automotive suppliers as they also grapple with short-term worries including trade wars. A number of carmakers, including Daimler AG and Fiat Chrysler Automobiles NV, have cut their expectations for the year after customers in China held back from purchasing new vehicles ahead of a change in import tariff, hoping for lower prices.
Continental shares fell 1.2 percent to 153.30 euros at 5:17 p.m. in Frankfurt amid a broader slump in the market. They are down 32 percent this year, trading at their lowest level since Nov. 18, 2014.
©2018 Bloomberg L.P.