First quarter of 2020: Continental Group strengthens cost control
Consolidated sales for the first quarter were 9.8 billion euros; adjusted EBIT margin was 4.4%; natural sales growth rate decreased by 10.9%
Sufficient liquidity (6.8 billion euros), after excluding M&A and business splitting factors, a small amount of positive free cash flow of 59 million euros was achieved in the first three months)
CEO Dr. Elmar Degenhart said: “The new coronavirus outbreak will have a stronger impact on Continental Group’s financial situation in the second quarter.”
In view of the current market situation, Continental is making every effort to reduce investment, reducing investment by at least 20% year-on-year in this fiscal year
Continental Group expects 2020 sales and profits to be much lower than last year
Executive board members continue to abandon 10% of their remuneration for the next three months (until the end of July)
Resumption of production: about one-fifth of the global production bases are still temporarily suspended
Develop a global protection strategy to ensure safe production during the outbreak, and plan to produce masks
May 7, 2020, Hanover/Shanghai. Technology company Continental Group’s sales and profits in the first quarter fell sharply. The main reason is that due to the impact of the new coronavirus epidemic, the Chinese auto industry has ceased production. According to current estimates, China’s passenger vehicle and light commercial vehicle production fell by approximately 50% year-on-year during the reporting period, and the European market (approximately -20%) and the North American market (approximately -10%) also performed weaker The global automobile production was 17.3 million vehicles, a decrease of about 25%, and a decrease of 5.7 million vehicles compared to the same period last year.
As shown in the main data for the first quarter released on April 27, 2020, Continental’s sales were 9.8 billion euros (first quarter of 2019: 11 billion euros), a decrease of 10.9% from the same period last year. From a natural growth point of view – that is, without taking into account the impact of reporting consolidation and exchange rate changes – sales also fell by 10.9%. Adjusted EBITDA fell to 432 million euros (first quarter of 2019: 884 million euros), about half of the same period last year. The adjusted EBIT margin is 4.4% (Q1 2019: 8.1%).
In terms of sales and profits, the second quarter is expected to be the weakest quarter for Continental this fiscal year, as Europe and the United States were severely affected by the new coronavirus epidemic during this period. “The new coronavirus will have a stronger impact on our financial position in the second quarter. Usually, three-quarters of our sales come from the European and North American markets. But since the end of March, these two regions have been affected by the new The corona virus epidemic has been severely hit, while at the same time automobile production in China has gradually stabilized,” said Dr. Elmar Degenhart, CEO of Continental. As for the current regional sales ratio, he emphasized that Continental will further balance the revenue structure and increase the proportion of total sales in the Asian market to 30% in the medium term.
As Continental announced at the end of April, as the current situation is still very volatile, it is not yet certain when to provide more detailed fiscal year 2020 forecasts. However, as a DAX listed company, Continental Group expects full-year sales and profits to be much lower than the previous fiscal year.
Further strengthen cost control and achieve positive free cash flow
In the first quarter, Continental Group further strengthened cost control. Postpone all non-urgent projects and investments until further notice. Continental is working hard to reduce its investment in this fiscal year, which is at least 20% lower than last year. “Since the beginning of March, due to the impact of the new coronavirus epidemic, the economic environment has deteriorated further, which means that we need to increase the cost reduction efforts. We are carefully assessing the necessity of all current expenditures and investments, and seeking effective short-term Savings measures. This will be better reflected in our second quarter data,” explains Continental Group Chief Financial Officer Wolfgang Schäfer: “We will continue to promote core R&D projects and prepare for new mass production projects. .”
————————————– This article is taken from continental website: https://www.continental-corporation.cn/zh-cn/%E6%96%B0%E9%97%BB%E4%B8%AD%E5%BF%83/%E5%A4%A7%E9%99%86%E9%9B%86%E5%9B%A2%E6%96%B0%E9%97%BB%E7%A8%BF/q1-2020-220720
And from this article, we can know that due to the COVID-19 virus’ infulence, 2020 is a diffcult year for every company.
From kinds of way to save the cost control and open a new business way is the biggest issue in this year.