Analysts: Conti ’missed’ EBIT by 15%, notwithstanding better Tires performance

Following the news that Continental AG has pre-released fourth-quarter 2020/full-year 2022 sales, adjusted pre-tax profit (EBIT) margin and free-cash-flow figures, financial analysts immediately began sharing their verdict.

According to a Jefferies investor’s note, Conti “missed” on fourth-quarter earnings and free-cash-flow. Fourth-quarter group sales were slightly better, while adjusted EBIT reportedly “missed by 15 per cent” due to worse performance in the Automotive segment of the business. Similarly, ContiTech margin came in at 2.3 per cent compared with more than 5 per cent historically. That underperformance was put down to: “increased production costs, unfavourable mix and Covid restrictions in China.”

“We note slightly better outperformance in Auto business at circa 14 per cent” the analysts reported in their note data 17 January 2023, adding: “[the] full-year 2022 miss was broadly anticipated which Conti noted was due to high AR and [the] earnings miss in ContiTech.”

However, the analysts also pointed out that any negatives were “partly offset by better [performance in] Tires” where EBIT margins came in at 10.3 per cent (Prior year: 9.7%).

Nevertheless, they concluded: “we calculate group adjusted EBIT of €494 million”, adding that this represents “a 15 per cent miss…”