Continental AG Issues Dire Outlook as Coronavirus Hits Auto Industry

By William Boston

BERLIN--Continental AG, which supplies auto makers with components from tires to computers for self-driving cars, provided a dire outlook for an industry that is caught in the grip of the coronavirus and a deteriorating global economy.

The Hanover-based company, which operates around 50 factories and research facilities in China, said Thursday that in light of the impact of the coronavirus it would step up cost-cutting measures and increased planned savings beyond the annual 500-million euro ($557 million) target it had set for 2023 as part of a longer term shift from parts for conventional gas-powered cars to electric cars.

The auto industry was expected to produce around 85 million cars and light trucks this year, well off the peak of around 95 million vehicles in 2017, as the weakening of global demand accelerates in the wake of the coronavirus.

"That means we are dealing with 10 million fewer vehicles," Continental CEO Elmar Degenhardt told reporters, "and we will have to adjust accordingly."

Continental, which swung to a loss before interest and taxes of EUR268 million in 2019 as a result of restructuring charges, said sales this year could fall nearly 5% to EUR42.5 billion and its pretax profit margin would fall to between 5.5% and 6.5% from more than 9% in 2018.

Write to William Boston at [e-mail]

(END) Dow Jones Newswires

March 05, 2020 06:08 ET (11:08 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.