Late payments and higher costs in the industrial business are causing problems for automotive supplier Continental.

At 200 million euros, the cash inflow in the past year was probably significantly lower than recently expected at 600 to 800 million euros, the company announced on Tuesday evening on the basis of preliminary and unaudited figures. The unexpectedly low profit in the ContiTech division played a major role in this: at 4.7 percent, the adjusted profit margin in 2022 was below the forecast of around six to seven percent. This was mainly due to higher production costs, an unfavorable product mix and pandemic-related business restrictions in China. In addition, incoming payments were lower than expected as at the reporting date.

In contrast, Conti met its own expectations in terms of turnover and profit margin according to the preliminary figures. Revenue rose to 39.4 billion euros in 2022, the forecast was 38.3 to 40.1 billion euros. At around five percent, the adjusted profit margin in the past year was within the forecast range of 4.7 to 5.7 percent. Conti benefited in particular from the profitable tire business, where the profit margin was slightly higher than expected at 13.1 percent.

The automotive division earned money again in the fourth quarter and achieved a profit margin of 2.1 percent. However, it was still in the red for the year as a whole. Automotive suppliers have recently suffered from the rapid rise in costs. The company recently raised its prices in order to break free from the grip of the price surge in energy, raw materials and logistics triggered by Russia's war in Ukraine and the cost pressure from car manufacturers. Continental will present its full financial figures for the past year on March 8.

(Report by Christina Amann, edited by Sabine Ehrhardt. If you have any questions, please contact our editorial team at Berlin.Newsroom@thomsonreuters.com (for politics and the economy) or Frankfurt.Newsroom@thomsonreuters.com (for companies and markets)