Introduction:
Continental, the German auto parts maker, recently announced its results for 2022. Despite facing significant challenges in the form of supply chain disruptions and Russian asset impairments, the company is optimistic about the future. In this article, we will explore the company’s financial results, the challenges it faced in 2022, and its plans for the future.
Continental’s Results for 2022
Continental’s net income fell by almost half in 2022, from 1.4 billion euros in 2021 to 67 million euros in 2022. The company incurred an additional 3.3 billion euros in costs due to increased material, energy, and logistics costs, as well as wages and salaries. Despite these challenges, Continental’s consolidated sales rose to 39.4 billion euros last year. Additionally, the company’s order intake from the automotive sector increased by 26%, thanks to the global recovery of the auto market from the pandemic and economic weakness.
Challenges Faced by Continental in 2022
Continental faced significant challenges in 2022, including supply chain disruptions and Russian asset impairments. The company suspended production at its Kaluga plant in Russia following Moscow’s invasion of Ukraine in February 2021. It also halted imports and exports from the country. The events in Russia led to asset impairments of 87 million euros, negative special effects of around 1 billion euros, and high-interest rates. CEO Nikolai Setzer cited the war against Ukraine as a factor that drove up the prices of raw materials, semi-finished products, energy, and logistics.
Continental’s Plans for the Future
Despite the challenges faced by Continental in 2022, the company is optimistic about the future. Continental predicts that global auto production will rise by 2%-4% in 2023, in line with a forecast by Germany’s autos association in January. The company also forecasts a 5.5-6.5% margin this year on higher consolidated sales of 42-45 billion euros, up from 39.4 billion last year. In January, Continental reported preliminary results, stating that its 2022 margin was at the lower end of its outlook at 5%. Additionally, Continental is striving for a “controlled withdrawal” from Russia, as it moves beyond last year’s performance, which was undermined by asset impairments and negative special effects.
Conclusion:
Continental faced significant challenges in 2022, including supply chain disruptions and Russian asset impairments. However, the company remained resilient and is optimistic about the future. Continental predicts a rise in global auto production in 2023 and a boost in margins this year on higher consolidated sales. The company’s plans for a “controlled withdrawal” from Russia are also a positive sign for its future.
