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Continental's tyre margins hit by Trump's tariffs, weak dollar
Continental's tyre margins hit by Trump's tariffs, weak dollar

Time of India

time6 days ago

  • Automotive
  • Time of India

Continental's tyre margins hit by Trump's tariffs, weak dollar

Continental reported a weaker second-quarter operating profit for its core tyres business on Tuesday, citing headwinds related to unfavourable foreign exchange rates, U.S. import tariffs and muted demand in Europe. Adjusted operating profit was 401 million euros ($462.59 million) at the German car parts supplier's core unit, below analysts' consensus of 416.8 million. The corresponding margin of 12 per cent also fell slightly short of expectations. The tyre business suffered a net impact in a mid-double-digit million euro range from U.S. President Donald Trump's tariffs, as efforts to mitigate them unfold with a delay, it said. But the 15 per cent baseline tariff on EU goods, agreed in July, means Continental will face a slightly smaller headwind and have more room to manoeuvre, finance chief Olaf Schick told Reuters, confirming the company's full-year outlook. The group reported a 0.4 per cent decline in quarterly organic sales amid persistently weak markets. That excluded a negative currency exchange effect of 3.3 per cent, mainly from the U.S. dollar. Continental, which made more than a quarter of its 2024 sales in North America, has seen its profits come under pressure as the euro strengthened by about 12 per cent against the dollar since the start of 2025, reducing the euro value of its U.S. sales. The company's shares fell 2 per cent by 0820 GMT. Restructuring continues Continental is in the process of splitting off two of its three businesses, seeking to reposition itself as a pure-play tyre maker, which it hopes will leave it better placed to handle a volatile market rattled by tariffs. The process includes the listing of its automotive division, which supplies a range of technologies for automakers, on September 18, and a planned sale of its Contitech unit. Schick said on Tuesday that Contitech's Original Equipment Solutions (OESL) business would be sold in the third quarter, without providing details on the buyer or deal price. The automotive business generated a profit margin of 4 per cent in the quarter, ahead of market expectations, thanks to cost cuts and sustained price adjustments, Continental said. "We've worked hard to make our group sectors more resilient and more agile," CEO Nikolai Setzer said in a statement.

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