Germany’s Continental flags huge cost burden in 2024

(Reuters) – German automotive supplier Continental on Thursday flagged higher costs and a flat car market in 2024, providing an outlook for the current year that was in line with market expectations.

The company said it expects 500 million euros ($545 million) in additional costs due to wages this year, mostly at its automotive division where it announced thousands of layoffs last year.

Its shares were down 4% at the bottom of Frankfurt’s blue-chip index at 0808 GMT.

The auto parts maker said it expects 2024 group sales of 41 billion to 44 billion euros, and an adjusted earnings before interest and tax (EBIT) margin of 6% to 7%.

That compared with forecast revenue of 42.8 billion euros and an adjusted EBIT margin of 6.8% for 2024, showed a company-provided analyst consensus.

At 2.5 billion euros, full-year adjusted operating profit slightly missed market expectations as inflation, exchange rate effects and higher freight costs weighed.

The group, which makes tyres and automotive driving technology, last year said it would reduce the number of its business areas from six to five to simplify operations.

Full-year sales rose 5.1% in 2023 to 41.4 billion euros.

Analysts had expected 41.7 billion euros.

Continental said it would propose a dividend of 2.20 euros per share, from 1.50 euros per share a year earlier.

($1 = 0.9181 euros)

Reporting by Bartosz Dabrowski; Writing by Christoph Steitz; Editing by Rachel More and Christopher Cushing