HANOVER (dpa-AFX) - German automotive parts maker Continental AG (CTTAY.PK), at its Capital Market Day on Tuesday, confirmed the planned sale of its ContiTech group sector. The company further lowered the margin outlook for fiscal 2025, and issued medium term forecast.
Continental CEO Nikolai Setzer said, 'For the first time in its history, Continental will become a pure-play tire manufacturer focused on value creation, profitability, cash flow and stable business development.'
Subject to the approval of the Continental Supervisory Board, the sale is scheduled to take place in 2026, after the sale of ContiTech's Original Equipment Solutions or OESL business +area, which is planned for later this year.
For fiscal 2025, Continental Group said it has lowered its margin expectations, as the changed conditions have led to an adjusted sales outlook for ContiTech as well as an adjusted margin outlook for Tires.
Continental expects sales in the range of around 19.5 billion euros to 21.0 billion euros and an adjusted EBIT margin of around 10.0 to 11.0 percent, compared to previous estimate of 10.5 to 11.5 percent.
For the Tires group sector, Continental expects sales of around 13.5 billion euros to 14.5 billion euros and an adjusted EBIT margin of around 12.5 to 14.0 percent, down from 13.3 to 14.3 percent expected earlier.
For the ContiTech group sector, sales are projected to be around 6.0 billion euros to 6.5 billion euros, down from previously expected 6.3 billion euros to 6.8 billion euros, and an adjusted EBIT margin of around 6.0 to 7.0 percent.
Continental also announced the new mid-term sales and profitability potential for the Continental Group and the Tires and ContiTech group sectors following the planned spin-off of Automotive and the planned sale of the OESL business area. ContiTech is still considered part of Continental in these mid-term projections.
Looking ahead for the mid-term, for the next three to five years, Continental Group projects sales of around 19.5 billion euros to 22.0 billion euros and adjusted EBIT margin of around 12.0 to 14.5 percent.
Tires group sector's sales would be around 14.5 billion euros to 16.0 billion euros, and adjusted EBIT margin of around 13.0 to 16.0 percent.
For the ContiTech group sector without OESL, the company projects sales of around 5.0 billion euros to 6.0 billion euros and adjusted EBIT margin of around 11.0 to 13.0 percent.
The company added that following the planned spin-off of the Automotive group sector in September of this year, the company plans an increased distribution range of 40 to 60 percent of net income, compared to previously planned 20 to 40 percent.
Following the sale of ContiTech, the future pure-play tire company will review whether to allocate proceeds from the sale to a special dividend and share buybacks. In the medium term, Continental will consider increasing the potential basic dividend within the targeted range of 40 to 60 percent as well as possibly buying back more shares.
On the XETRA in Germany, Continental shares were trading at 74.42 euros, up 0.46 percent.
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