Continental holds its ground against downward pull in automotive industry

March 07, 2019 //By Christoph Hammerschmidt
Continental holds its ground against downward pull in automotive industry
Despite significantly increased uncertainties and risks in the global automotive market, technology supplier Continental achieved its targets last year. However, the forecast for the near future was cautious. And: under the impression of the change in mobility, the proportion of developers at the company is shifting further towards software.

Continental's sales grew by only 0.9 percent to 44.4 billion euros in 2018 compared to 2017; profit (EBIT) even dropped by almost 12 percent to 4.03 billion euros. Nevertheless, CEO Elmar Degenhart was optimistic. "We continue to grow faster than our relevant markets," he said at the presentation of the figures in Hanover. "In the areas of autonomous driving, electric mobility and networking, we are already delivering what others are still testing.“

The company sees increasing risks for the coming fiscal year: Global production of passenger cars and light commercial vehicles is stagnating at about 94 million units; Continental even expects production to decline slightly in the first half of 2019. The company regards the unclear economic development in China and the trade conflicts between the USA and China as well as between the USA and Europe as risk factors. The continuing uncertainty surrounding the Brexit made the situation even more difficult, Degenhart said. Nevertheless, the company is sticking to its sales and profit targets (€44 to 47 billion sales, adjusted EBIT 8 to 9 percent).

The planned IPO of the Powertrain division will be an important milestone for 2019. It will develop and produce systems and solutions for conventional and electric drives under the name Vitesco. A core element of this will be the 48V drives, for which Continental manufactures all components including motors, battery management systems and power electronics.

Against the backdrop of global change in mobility, Continental is further increasing its R&D spending. The corresponding budget is expected to grow by 3.4 percent to 3.21 billion euros, or 7.2 percent of sales. The company currently employs 49,000 engineers worldwide in research and development. Over the next three years, the number of software-focused developers is expected to rise disproportionately from the current 19,000 to 25,000 in 2022.


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