By Victoria Waldersee and Andrey Sychev
BERLIN (Reuters) -German auto parts supplier Continental 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 more than 8% by 1000 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.
Automotive companies across Europe have announced plant closures and big layoffs as they struggle with weak demand, high costs, competition from China, and a trade war erupting with the United States, a key export market for the sector.
Continental cut its sales guidance twice last year on weak industrial demand in Europe and North America, and forecasts another gloomy year for car sales. It expects global production of passenger cars and light commercial vehicles to stagnate.
The company is forecasting 38 billion euros ($39.91 billion) to 41 billion euros in sales this year with an adjusted earnings margin in the range of 6.5-7.5%, similar to last year. It expects to continue cutting costs to support its profit margin.
“Our cost and efficiency measures are proving effective. This is all the more important because we again do not expect any tailwinds from the market this year,” CFO Olaf Schick said in a statement.
The imposition of new U.S. tariffs on goods from Mexico and Canada is likely to add to the company’s worries on future outlook.
Continental operates factories in all three countries, and employs around 38,000 people in North America, which is the company’s second biggest market after Europe, accounting for roughly a third of total sales.
It said it expects to enter discussions over the future of its Mexico and Canada sites once the level of tariffs has been determined.
Continental, which is in the midst of a deep restructuring involving plant closures in Germany and thousands of job cuts, will announce new short- and mid-term targets later this year, it said.
It is preparing a possible spinoff of its automotive division, a move it has mulled since last August.
($1 = 0.9537 euros)
($1 = 0.9521 euros)
(Reporting by Victoria Waldersee, Andrey Sychev; Editing by Rachna Uppal)
