HAMBURG/BERLIN (Reuters) - German automotive supplier Continental’s spin-off of its powertrain division will depend on a recovery of the auto market, it said on Thursday as it reported a 22 percent slump in net profit, hurt by a downturn in global car demand.
The Hannover-based company last month pushed back an initial public offering (IPO) of the powertrain division to 2020, having initially envisioned an IPO in the second half of this year.
“We have nothing to give away. If the markets are not in the right shape, it can also be later,” Chief Financial Officer Wolfgang Schaefer told Reuters.
Continental said it still expects a market upturn in the second half of this year and strict cost discipline to help it to achieve its full-year guidance for an adjusted operating margin of 8-9 percent, compared with more than 9 percent last year.
Daimler, VW and BMW all posted sharply lower first-quarter earnings as the auto sector struggles to keep up investment in electric and self-driving cars while preparing their combustion engine technologies for stricter emissions rules.
Continental last month said its adjusted operating margin had fallen to 8.1 percent from 9.7 percent a year ago, hit by a downturn in car demand as sales in China, the world’s largest car market, slowed for a ninth month running.
Net profit for the first three months of the year came in at 575 million euros (494 million pounds), compared with 738 million euros a year earlier, even as sales remained flat, sending shares down 3.7 percent by 0856 GMT.
Sales in its automotive group unit fell 1.8 percent to 6.7 billion euros in the quarter, while the division’s operating margin shrank to 5.4 percent from 8.2 percent a year earlier, hurt by the sluggish market environment.
Reporting by Jan Schwartz; Writing by Caroline Copley; Editing by David Goodman