Continental cuts 2021 vehicle production outlook on chips crunch

Automotive Industry

Source: Automotive News Europe, 2021-08-05

Continental cut its growth forecast for the production of passenger and light commercial vehicles in 2021 due to a chip supply crunch it sees persisting throughout the year.

The German supplier trimmed its forecast for production to rise 8% to 10%, down from a previous forecast for 9% to 12%.

It also cut the upper end of its 2021 sales outlook for its automotive division to €16.5bn ($19.54bn) from 17bn.

The company said semiconductors bottlenecks slowed automotive production in the latest quarter.

"In the automotive technologies group sector the burden of the chip bottleneck is clearly being felt," CEO Nikolai Setzer said in statement on 5 August.

Continental said sales were €9.9bn in the second quarter and adjusted earnings before interest and taxes (EBIT) were at €711m, compared to a loss of €635m in the same quarter in 2020.

Continental now sees at least €33.5bn of revenue this year, up from €32.5bn, and at least a 6.5% adjusted Ebit margin, up from 6%.

For the rubber unit -- with products spanning tires, hoses and industrial conveyors -- Continental raised its estimate for the drag higher raw material prices will have on the business to €500m, from 350m.

The supply woes idling car plants have led most manufacturers to set conservative expectations for the year even after a strong first half.

BMW kept its profit forecast unchanged and Volkswagen warned the constraints will get worse during the second half of 2021.

Chip challenges and continued fallout from the pandemic have hit Continental at a time of declining returns that prompted the manufacturer to announce plans last year to cut or transfer some 30,000 jobs.

 


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