German automotive parts supplier Continental (CONG.DE) expects a weak year for the market in 2025, and has yet to assess the potential impact of new U.S. tariffs on its North American operations, it said on Tuesday, sending shares sharply lower.
Shares in Continental had slumped around 9% by 1300 GMT to their lowest level since January, with a local trader saying the company's weak outlook for 2025 was weighing on the stock price.
Like many other firms across Europe's auto industry, Continental is in the midst of a deep restructuring involving plant closures and thousands of job cuts, as high energy and labour costs at home are compounded by competition from China and a global trade war.
After cutting its outlook twice last year, executives on Tuesday forecast another gloomy year for car sales, with global production of passenger cars and light commercial vehicles expected to stagnate.
Continental is forecasting sales of between 38 billion euros ($39.91 billion) and 41 billion euros this year, with an adjusted earnings margin in the range of 6.5-7.5%, similar to last year. It will continue to cut costs to support its profit margin.
It is also preparing a spinoff of its automotive division in the second half of this year, a move it has mulled since last August.
The current guidance does not take into account any changes in global tariffs, according to Continental's investor presentation.
TARIFF WOES
The imposition of new U.S. tariffs on goods from Mexico and Canada is likely to add to the company's worries.
Continental operates factories in all three countries, and employs around 38,000 people in North America, the company's second biggest market after Europe accounting for roughly a third of total sales.
"We are not in a position to absorb additional tariffs," CFO Olaf Schick told Reuters. The company was in discussions with customers on how to manage the additional costs, Schick added.
Approximately 90% of the firm's tyres for trucks in the U.S. are produced locally, but around half the tyres for U.S. passenger cars are imported, mainly from Europe.
($1 = 0.9521 euros)
