Tire manufacturer: Conti expects higher returns despite higher rubber prices - shares rise significantly

The automotive supplier Continental has so far successfully resisted rising raw material prices and the weak car market. In the third quarter, sales in the tire business - the remaining core business - fell by 1.5 percent to 3.5 billion euros, as the company announced on Wednesday in Hanover.

However, the adjusted operating result improved by seven percent to 514 million euros, and the adjusted return on sales before interest and taxes (EBIT margin) climbed to 14.9 (previous year: 13.9) percent. Continental is going “stronger into a challenging year-end spurt,” said CEO Christian Kötz. The prospect of a higher margin for the year as a whole drove the Conti share, which is included in the leading index Dax, up by more than six percent.

The increased prices for oil and rubber as a result of the wars in the Middle East are now also reflected in the profit and loss statement - with a delay because Conti buys raw materials three to six months in advance: "We do not expect any relief on the raw materials side," said CFO Roland Welzbacher to the Reuters news agency.

In the third quarter, the rising material prices were reflected in a mid-double-digit million amount, and a similar effect is expected in the fourth quarter. Continental is therefore now trying to enforce higher sales prices: “We are talking to the customers,” said Welzbacher.

At the beginning of the year, Continental had still expected positive conditions. In contrast, additional burdens in the low to mid three-digit million range have to be shouldered, said the CFO. Nevertheless, optimism is growing: Continental has limited its sales forecast to the middle of the previous range: sales in the core business are expected to be between 13.5 and 13.9 (previously 13.2 to 14.2) billion euros in 2026. The adjusted EBIT margin is even higher than last at 13.4 and 14.0 (previously 12.0 to 13.5) percent.

The bottom line is that Continental was back in the black at 349 million euros, after the spin-off of the automotive supplier division Aumovio and the sale of the original parts division OESL led to a loss of 756 million euros a year ago. Continental sold its business with rubber products for automobile manufacturers (OESL) in the spring and also separated from the rest of the ContiTech plastics technology division in the summer. This will go to the financial investor Lone Star for four billion euros, but the sale has not yet been completed.

Things are going worse at ContiTech than expected: Sales in 2026 will be between 4.2 and 4.4 (previously: up to 4.8) billion euros, and the EBIT margin will be 6.5 to 7.5 (previously 7.0 to 8.5) percent.

Continental will thus become a pure tire manufacturer. “We have again increased our earnings compared to the same quarter of the previous year and continue to be highly profitable – especially in Europe and Asia,” said Welzbacher. Large tires for SUVs and electric vehicles in particular drove business.