Investing.com — Shares in Continental (ETR:) surged on Thursday after the German tire maker’s pre-close call in the prior session led analysts to suggest that the company’s automotive unit had made progress in the second quarter.
In its final communication prior to publishing quarterly results on Aug. 7, Continental said the contribution from pricing at the division is “required to be positive” in the latest three-month period.
Following the commentary, analysts at Stifel said they had “gained the impression that Continental made tangible progress with regard to price realization in Automotive in [the second quarter].”
As a result, they estimated that quarterly adjusted earnings before interest and taxes at the car unit will come in at 174 million euros, ahead of Visible Alpha consensus projections of 16 million euros. Group-wide, the figure is seen at 704 million euros, roughly 26% above expectations.
Meanwhile, Continental said a cost-cutting push will yield “major savings” in the second half of 2024, leading to full-year expense reductions in the high-double to low-triple digits.
The Stifel analysts predicted that, due to the savings drive and improved pricing, Continental “will not yet capitulate” on its 3% to 4% full-year auto unit margin target. However, they flagged the goal remains “tough to reach,” as the group faces weak demand particularly in Europe.
From: investing.com
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