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CONSUMER CYCLICALS: Continental (CONGR Baa2/BBB/BBB): 2Q24 Results

CONSUMER CYCLICALS

Neutral for credit. Unsurprisingly given comments so far this earnings season, OEM customer activity remains weak. No further details on capital structure post the proposed demerger; as we commented yesterday our base case is that it will be credit neutral.

  • Continental revenue was 3% below consensus for 2Q, missing at all divisions and mainly driven by Automotive (parts). Organic growth was -3% YoY on FX drag and weak end markets.
  • Adj. EBIT was 3% better than expected. Margins were a touch better than expected at 7%. Automotive swung to positive margins thanks to cost reductions and lower freight rates. Labour and inflation headwinds remain for the group.
  • FCF improved from -€14mn to +€147mn YoY, mainly due to WC release with capex similar to last year.
  • FY24 revenue guidance reduced 3% at midpoint; already largely reflected in consensus. FCF guidance reduced by €100mn to €0.6-1bn; analysts expect €900mn.
  • Webcast 11.30 BST https://www.webcast-eqs.com/register/continental-2024-h1/en.
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