Despite “unsatisfactory” cash flow, Continental 2022 sales & margins within range

Using “initial preliminary and unaudited figures” as a source, Continental Group has published its key financial figures for the fourth quarter and fiscal 2022. These show adjusted free cash flow to be significantly below the target range. The tyre maker and automotive systems company is nevertheless confident of achieving its targeted consolidated sales and adjusted margin.

Adjusted free cash flow for the Continental Group is expected to be around €1.6 billion in the fourth quarter and around €200 million for the year as a whole. The outlook for 2022 was adjusted free cash flow of approximately €600 million to €800 million, and Continental says the main reason it failed to meet this target was that cash inflow was lower than expected, resulting in a correspondingly high level of receivables in the Continental Group. Lower-than-expected earnings in the ContiTech group sector also contributed to the result.

Despite the “unsatisfactory cash flow situation” as of the reporting date (17 January 2023), Continental anticipates achieving the consolidated sales and adjusted margin outlook:

• The Continental Group’s consolidated sales amounted to around €10.3 billion in the fourth quarter and around €39.4 billion for fiscal 2022 as a whole (outlook: around €38.3 billion to €40.1 billion). The adjusted EBIT margin is expected to be around 4.8 per cent in the fourth quarter and around 5.0 per cent for fiscal 2022 as a whole (outlook: around 4.7 per cent to 5.7 per cent).
• In the Automotive group sector, sales amounted to around €4.8 billion in the fourth quarter and around €18.3 billion for fiscal 2022 as a whole (outlook: around €17.8 billion to €18.8 billion). The adjusted EBIT margin is expected to be around 2.1 per cent in the fourth quarter and around -0.2 per cent for fiscal 2022 as a whole (outlook: around -0.5 per cent to 1.0 per cent).
• In the Tires group sector, sales amounted to around €3.7 billion in the fourth quarter and around €14.0 billion for fiscal 2022 as a whole (outlook: around €13.8 billion to €14.2 billion). The adjusted EBIT margin is expected to be around 10.3 per cent in the fourth quarter and around 13.1 per cent for fiscal 2022 as a whole (outlook: around 12.0 per cent to 13.0 per cent).
• In the ContiTech group sector, sales amounted to around €1.7 billion in the fourth quarter and around €6.6 billion for fiscal 2022 as a whole (outlook: around €6.3 billion to €6.5 billion). The adjusted EBIT margin is expected to be around 2.3 per cent in the fourth quarter and around 4.7 per cent for fiscal 2022 as a whole (outlook: around 6 per cent to 7 per cent). The lower-than-expected earnings are mainly due to increased production costs, an unfavourable product mix and pandemic-related business restrictions in China.

Continental will publish its preliminary financial figures for fiscal 2022 on 8 March 2023 and the company’s annual report for fiscal 2022 will on 22 March 2023.