Continental Cuts Outlook on Lower Global Auto Production
(Bloomberg) -- Continental AG lowered its sales and profit guidance for the year after the semiconductor shortage and other supply-chain snarls intensified in the third quarter to further disrupt vehicle manufacturing.
Europe’s second-largest vehicle parts maker expects group sales of as much as 33.5 billion euros ($39 billion) in 2021, down from an earlier prediction of as much as 34.5 billion euros, the company said Friday. Margins are forecast to come in at as low as 5.2%.
Rising costs for anything from raw materials to energy and logistics are becoming “more material,” Continental said in a statement.
Industry executives expect the chip shortage to persist well into next year, with consultancy AlixPartners predicting global automakers to build 7.7 million fewer vehicles this year alone. While auto suppliers have been hard hit by the crisis, carmakers have mitigated the supply strains by raising prices and steering production to their most lucrative models. Continental rival Faurecia SA cut its sales and profitability forecasts last month.
Continental is pushing through a deep overhaul of its operations to stay competitive in the shift toward electric cars and new mobility needs.
©2021 Bloomberg L.P.