Continental Shares Plunge After 2019 Loss, Dividend Cut
March 05 2020 - 5:20AM
Dow Jones News
By Jessica Sier
Continental AG shares dropped sharply on Thursday after the
car-parts maker reported a net loss for 2019, as it gave a somber
outlook for the automotive industry.
At 1030 GMT, the stock was trading 11% lower at EUR85.79.
The manufacturer reported a 1.23 billion euro ($1.37 billion)
net loss for 2019, compared with a net profit EUR2.90 billion a
year earlier, and cut its dividend to EUR4 per share from EUR4.75
in 2018.
The German company said it does not expect any recovery in the
economic environment in 2020, and has revised its sales targets
downwards, anticipating sales of around EUR42.50 billion to
EUR44.50 billion, and an adjusted EBIT margin of around 5.5% to
6.5%.
Citi analysts expect the cautious outlook to result in consensus
downgrades of around 15% to 2020 EBIT. "We also expect the shares
to remain under pressure," said Gabriel Adler, equity analyst at
Citi, in a note.
RBC analysts noted Continental's historical caution.
"Continental has a history of forecasting market conditions below
its peers and given uncertainties surrounding coronavirus, perhaps
management is baking in conservatism," said Tom Narayan, equity
analyst at RBC Capital Markets.
Continental shares are down almost 40% over the last twelve
months, as the German company grapples with a deteriorating auto
industry. It said it expects a 2% to 5% decline in global
automotive production this year.
The company is also in the midst of a restructuring program
involving the loss of 5,000 jobs. Continental said Thursday it
would look for further measures to counteract its worsening
outlook.
"We are currently looking into how we can effectively respond to
a weakening overall situation and its impact in the medium term,
with further measures that go beyond our current structural
program," said Elmar Degenhart, chairman of the executive
board.
The company said it will give more details in May, it said.
Write to Jessica Sier at jessica.sier@wsj.com
(END) Dow Jones Newswires
March 05, 2020 05:05 ET (10:05 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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