Continental defies headwinds from high costs and Ukraine war
Supply bottlenecks, especially for semiconductors, slowed Continental down last year. And now the conflict in Ukraine and the resulting deterioration of the major geopolitical weather situation have been added to the mix. Against this backdrop, the automotive supplier has actually done quite well. The company was able to increase its sales by 6% to 33.8 billion euros. In addition, Continental made a profit for the first time after two years in the red – 1.8 billion remained below the line. For the coming year, the automotive supplier expects a further increase in sales to 38 to 40 billion euros. However, the outlook is further burdened by the war in Ukraine. The company has stopped its production in Kaluga (Russia). However, no products relevant to electronics are manufactured there.
The wind also blew in the company’s face from the cost side; raw materials in particular have become much more expensive. The company expects additional procurement and logistics costs of 2.3 billion euros in the current year. This does not even include the costs for the planned build-up of a semiconductor security stock. In order to be better prepared against supply bottlenecks for chips in the future, Continental CEO Nikolai Setzer wants to maintain safety stocks of these components. He wants to build these up gradually – “of course only where sufficient semiconductors will be available,” Setzer explained. Which, of course, shows exactly the problem: the very semiconductors that are difficult to obtain are also the very ones that will be the focus of the planned stockpiling.
As eeNews Europe reported, cable harness manufacturer Leoni has closed its two factories in Ukraine. This also creates problems for Continental. “We don’t buy any cable harnesses, but we are indirectly affected to the extent that production is down at our customers because of this,” Setzer said.
Setzer did have one piece of good news to report: The company’s vehicle high-performance computer will soon go into series production at a (as usual, unnamed) Chinese volume manufacturer; it will control the central functions in an electric car. With this, Continental lands another large-scale production success for the computer – the HPC is also installed in Volkswagen’s ID.3 and ID.4 electric cars.
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