Germany's Continental Bullish on Tire Demand, Raises U.K. Prices
August 03 2016 - 7:48AM
Dow Jones News
By Ilka Kopplin and William Wilkes
FRANKFURT--Continental AG (CON.XE) raised its 2016 outlook on
robust demand for tires, noting it increased tire prices in the
U.K. after the value of sterling fell sharply following the
country's Brexit vote.
The German auto supplier, which also makes auto technology and
components, said it hiked prices on Aug. 1. The U.K. vote to quit
the EU on June 23 sent the pound sharply lower against the euro,
the currency Continental books revenues in. Continental declined to
say how much it increased prices.
Continental reported a second-quarter net profit of 905 million
euros ($$), up from EUR792 million in the year-earlier period. It
also improved its outlook based on robust demand for tires, saying
its margin on earnings before interest and taxes would exceed 11%
in 2016, above a previous forecast of around 11%.
Continental Chief Financial Officer Wolfgang Schafer warned
Brexit would have "a greater impact" on the U.K. automotive
industry if the country got a bad deal in future trade talks with
the EU.
The potential fallout of Brexit has worried the auto industry.
Continental's decision to raise U.K. prices to offset the cost of a
weak pound follows a series of manufacturer warnings about the
vote's impact.
General Motors Co. said last week that the pound, which has
declined roughly 12% versus the dollar, could shave $400 million
off its second-half earnings. A week ago, Peugeot Chief Executive
Carlos Tavares said automakers were waiting for somebody to make
the first move to raise prices.
The U.K. car market, the second largest in Europe, has slowed
sharply since Brexit, with sales falling even as other major EU
markets recorded growth or flat sales, according data published by
the European Automobile Manufacturers' Association last month.
The outlook for U.K. sales may darken further. On Friday, market
research firm GfK Ltd said its long-running gauge of consumer
confidence recorded its steepest month-on-month drop since
1990.
Write to Ilka Kopplin at ilka.kopplin at wsj.com and William
Wilkes at william.wilkes@wsj.com
(END) Dow Jones Newswires
August 03, 2016 07:33 ET (11:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Aug 2024 to Sep 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Sep 2023 to Sep 2024