Continental AG expects earnings at its key automotive unit to improve in the current quarter as carmakers roll out several new models, bolstering production.

Continental’s third-quarter (3Q) adjusted operating earnings beat analyst projections on robust early demand for winter tyres in Europe. The German parts maker also is continuing a cost-cutting push that boosted the auto division’s margin in the period.

“This was a good 3Q from Conti,” Bernstein analysts led by Harry Martin said in a note on Monday. The car-parts business benefitted “from cost reductions, efficiency measures and price negotiations”.

Continental shares rose as much as 9.3% in Frankfurt, the steepest intraday gain since July. The stock is still down more than a fifth this year.

Continental, Robert Bosch GmbH and ZF Friedrichshafen AG are lowering expenses to deal with a downturn in the automotive industry. Continental is also moving forward with plans to separate and possibly list its car-parts business, which employs around 100,000 people.

“Regarding the spinoff, we’re still in the detail analysis,” Continental chief financial officer Olaf Schick said Monday on Bloomberg Television. “We’re making good progress and we’re targeting the second half of 2025.”

Bosch and ZF together plan to cut more than 20,000 jobs, while Schaeffler AG said last week it plans to reduce or relocate thousands of positions in Europe and close two sites to save money. Industry executives have blamed high energy prices and overbearing bureaucracy as reasons for a manufacturing exodus from Europe’s biggest economy.

Continental anticipates rising global automotive production in the current quarter as several automakers begin sales of new models. 

The German manufacturer slightly lowered its annual sales outlook, to a level largely in line with consensus, because of weak demand from non-automotive clients in Europe and North America. Industrial demand is expected to stay depressed through the first half of next year, Schick said.

“If you look at the industries that are really relevant for us — energy management, commercial vehicles, off-highway — we see no recovery and weak markets,” Schick said in a separate phone interview. The CFO added that Continental is looking at additional cost cuts, including on the labour side, at its Contitech industrial unit.

The parts maker now sees as much as €42 billion in revenue, from as much as €42.5 billion earlier, after Contitech sales and earnings declined in 3Q. The business makes non-tyre rubber and plastic components.

  - Bloomberg