Continental Picks a Lifer as CEO to Reverse Profit Erosion
(Bloomberg) -- Continental AG picked a company lifer who runs its automotive business to become chief executive officer and lead the parts supplier through one of the industry’s most wrenching restructurings.
Nikolai Setzer, 49, will succeed Elmar Degenhart at Europe’s second-largest car-parts maker effective Dec. 1, the Hanover, Germany-based manufacturer said in a statement Thursday. Degenhart, 61, announced his resignation last month, citing health issues.
Setzer headed Continental’s auto business after previously leading its high-margin tire division. He joined the tire-development operations in 1997 after studying mechanical engineering and economies in Germany and France.
He’ll have no time to waste putting his experience running the company’s two key divisions to work. Continental is in the midst of a cost-cutting drive affecting as many as 30,000 jobs after the Covid-19 pandemic triggered the most dramatic industry slump in decades.
The manufacturer has widened cutbacks this year and on Wednesday provided a muted outlook for 2020, forecasting profitability to shrink for the fourth time in five years. Investors are concerned Continental hasn’t been nimble enough to keep up with the industry’s tectonic shift toward electric and self-driving vehicles.
“Setzer needs to show that he can drive change despite being part of the management team that is criticized for the current problems,” Jefferies analyst Sascha Gommel said. “Investors are asking themselves what Conti will look like in 5 or 10 years and the company has not been successful in sharing their vision.”
Continental’s stock surged to an all-time high in January 2018 after the company confirmed a Bloomberg News report that it was considering options to streamline its structure. Management has made little progress since then with their review, contributing to the erasure of almost two-thirds of its market value.
Continental’s Full-Year Outlook Implies 4Q Autos Unit Woe: Analysts
Continental may spin off its Vitesco powertrain unit next year if markets continue to recover, Chief Financial Officer Wolfgang Schaefer said in a phone interview Wednesday. The manufacturer shelved those plans in April after the pandemic decimated production. It initially pursued a partial initial public offering.
The company plans to update investors next month on its strategy in areas from automated driving to high-performance computers for electric cars, Schaefer said. He declined to comment on a possible sale of the turbocharger business, but said in a Bloomberg Television interview that divestments are possible in the next 12 months.
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