BERLIN (Reuters) - Germany’s Continental (CONG.DE) expects “strong” profit and sales in the fourth quarter as carmakers’ accelerating embrace of electric and self-driving technologies boost orders at the core automotive business.
The world’s second-largest automotive supplier is bolstering its expertise in electronics, software and sensors as customers including Volkswagen (VOWG_p.DE) and Daimler (DAIGn.DE) invest in zero-emission cars and new mobility services while beefing up their combustion-engine fleets.
“Software and electronics (products) are essentially driving our growth, and that will also be the case in the coming years,” finance chief Wolfgang Schaefer said in an interview on Thursday after the company published third-quarter results.
Adjusted earnings before interest and tax (EBIT) jumped 69 percent to 1.09 billion euros ($1.27 billion) in the three months through September.
That compares with 643 million euros in the year-earlier period, when the company took a 450 million euro hit from costs of warranty cases for unspecified products and pending antitrust proceedings as well as increased spending on research and development.
Orders at the automotive division, which contributed nearly half to the group’s core earnings, jumped by a fifth in the first nine months to more than 30 billion euros, said Schaefer, adding the share of software and electronics products of overall growth was growing steadily.
The Hanover-based group, which makes fuel-injection systems and vehicle tyres as well as driver-assistance technology, is on track to boost sales to more than 50 billion euros as planned by 2020 from 40.5 billion last year, the CFO said.
“The company’s future prospects are very convincing,” M.M. Warburg analyst Marc-Rene Tonn said, who has a “buy” recommendation on the stock.
Continental shares were up 1.5 percent at 219.90 euros at 1024 GMT.
The company stuck with its full-year guidance for profit and sales. It expects sales of more than 44 billion euros and an adjusted operating margin of more than 10.5 percent.
($1 = 0.8614 euros)
Reporting by Andreas Cremer and Irene Preisinger; Editing by Maria Sheahan