FRANKFURT/BERLIN — Continental said it would step up cost savings after posting a drop in adjusted profit and a 1.2 billion-euro ($1.3 billion) net loss in 2019 as worldwide vehicle demand slumped.
Cost-cut plans will be presented in May because worldwide car production is expected to fall for the third year in row, by between 2 percent to 5 percent, CEO Elmar Degenhart said in a statement on Thursday. The CEO also said that forced redundancies may be necessary.
The net loss included non-cash, goodwill write-downs of 2.5 billion euros ($2.8 billion) due to diminished market expectations.
Adjusted earnings before interest and taxes fell 22 percent to 3.2 billion euros ($3.6 billion) in 2019. Full-year revenue came in at 44.5 billion euros ($49.7 billion), up slightly from 44.4 billion euros ($49.6 billion) in 2018.
Continental said it expects to deliver an adjusted EBIT margin of 5.5 percent to 6.5 percent this year.
“Conti remains a very large company which is not moving fast enough in this rapidly declining volume environment based on a legacy cost structure designed for volume growth,” analysts at Evercore ISI said in a note on Thursday.
Degenhart said potential supply chain disruptions, caused by coronavirus travel restrictions, had been avoided by switching from shipping parts to using air freight.
Production and logistics expected to normalize in the second quarter of the year, he said.
Continental ranks No. 4 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $37.8 billion in 2018.
