Auto parts giant Continental cuts outlook as supply bottleneck tightens, Auto News, ET Auto

German manufacturer of Continental auto parts

Germany’s leading auto parts maker Continental has downgraded its outlook for 2021 as semiconductor shortages and global supply chain disruptions weighed on the industry, the company said on Friday.

“The negative effects of inflation in the costs of major inputs, especially electronic and electromechanical components,” as well as raw materials, were becoming increasingly significant, Continental said in a statement.

The semiconductor shortage and ‘supply chain uncertainties’ mean the global auto market would stagnate from 2020, a year ravaged by the coronavirus pandemic.

The group’s sales for the whole year are now expected to be between 32.5 and 33.5 billion euros (37.8 to 39 billion dollars), whereas they were previously estimated between 33.5 billion. and 34.5 billion euros.

Continental’s operating margin (adjusted EBIT), a measure closely watched by investors, would now be between 5.2 and 5.6%, after being expected to be between 6.5 and 7%, the group said.

The upheavals caused by the pandemic have caused global shortages in everything from wood to semiconductors and plastics, limiting production across the economy.

Germany’s key auto sector has been hit particularly hard by the lack of computer chips, a key component of conventional and electric vehicles, forcing several German automakers to halt production.

European new car sales fell to their lowest level for a September since 1995, the Association of European Automobile Manufacturers announced last week.

Continental’s third-quarter sales fell 8.5% year-on-year to € 8 billion as the supply crisis deepened, according to preliminary figures released alongside the revised outlook.

The automotive branch of the group recorded a loss, with an operating margin of -2.3%. Full quarterly results will be released on November 10.

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