Tires drive Conti's 35% earnings growth as ContiTech 'discontinued' 

Hanover, Germany – Continental AG has posted a 35.1% year-on-year increase in second-quarter adjusted earnings as its tires business offset a weaker market environment.

Group sales for the second quarter of fiscal year 2026 fell 9.1% year-on-year to €4.4 billion, mainly due to the February sale of its Original Equipment Solutions (OESL) business. On an organic basis, sales declined 0.3%.

Adjusted earnings (EBIT) increased 35.1% to €570 million, while the adjusted earnings margin improved to 12.9% from 9.6% a year earlier.

Net income declined 45.9% to €274 million, mainly due to the spin-off of Aumovio, while adjusted free cash flow improved to €216 million from a negative €46 million in the prior-year period.

CFO Roland Welzbacher said the improved performance was driven by "a higher share of tires measuring 18 inches and above, lower impacts from exchange rates and tariffs, and positive effects from raw-material prices."

For the second half of the year, however, the company expects raw material costs to "increase substantially" and has "already taken steps to address this," he added.

The tires business reported second-quarter sales of €3.3 billion, down 0.2% year on year, although organic sales edged up 0.3%.

The division's adjusted earnings margin improved to 15.3% from 12.1%, driven by a “stronger mix of larger-diameter tires, favourable raw-material prices and lower impacts from exchange rates and tariffs.”

ContiTech generated second-quarter sales of €1.1 billion, down 29.5% year-on-year, with an adjusted earnings margin of 6.9%, compared with 8.0% a year earlier.

Organic sales declined 3.7% as a “slower-than-expected” market recovery weighed on performance.

Looking ahead, Continental maintained its full-year fiscal 2026 guidance for the tires business, forecasting sales of €13.2-14.2 billion and an adjusted earnings margin of 13.0-14.5%.

Following a €4-billion deal in early July to sell ContiTech to Lone Star (ERJ report), the German manufacturer said it’s outlook will not include the performance of its industrial and materials arm.

With ContiTech now reported as a 'discontinued operation', Continental expects group sales of €13.2-14.2 billion, an adjusted earnings margin of 12.0-13.5%, and adjusted free cash flow of €700 million - €1.1 billion for the full year.

Continental said that completion of the ContiTech sale remains subject to regulatory approvals and other customary closing conditions and could be finalised by the turn of the year.

"We continued our positive momentum," said CEO Christian Koetz. "In the Tires group sector, we achieved a good earnings margin in the second quarter, exceeding our outlook for 2026."

With the ContiTech agreement signed, Continental is now "in the final phase of our realignment as a pure-play tire manufacturer," Koetz added.