Conti targets Americas turnaround as regional profit gap emerges

Hanover, Germany – Continental AG is targeting a return to double-digit profitability in the Americas by 2029, as it plans additional production capacity and evaluates measures to address under-used truck tire capacity in the region.

Speaking at the company's capital markets day 1 Sept, CEO Christian Koetz said the Americas had the potential to achieve profitability comparable with Continental's other regions.

According to Koetz, in 2025, the EMEA tires business reported sales of €7.4 billion with a 16.7% adjusted EBIT margin.

Americas, meanwhile, posted sales of €4.5 billion with a margin of 8.0% while Asia-Pacific reported sales of €1.9 billion and a margin of 16.9%.

In the first half of 2026, the three regions reported adjusted EBIT margins of 17.1%, 9.4% and 18.8%, for EMEA, Americas and APAC respectively.

"The Americas has the potential, we are convinced, to get to similar and comparable profitability levels than the other regions, but definitely above the two-digit level," he said.

Koetz said Continental, which aims to be a “pure play tire company” following the planned divestment of ContiTech (ERJ report), was targeting "at least two-digit level within our midterm time frame", with its midterm horizon extending to 2029.

The improvement is expected to come from a combination of operational and commercial measures.

"In North America, our priority is clear. We want to return the business to its former strength by improving operational performance, digesting the impact of tariffs and currency effects and increasing profitability in what remains a challenging market environment," Koetz said.

The Continental leader said weak demand in the truck tire business had resulted in insufficient capacity utilisation and weighed on earnings.

While passenger car tire capacity in the Americas is "not far below" the company's targeted utilisation rate of around 90%, truck tire capacity is running at a lower level.

Globally, Koetz explained, dtruck tire capacity utilisation is around 80%, while in the Americas, and particularly North America, it is below that level.

Continental is therefore "evaluating options" to improve the utilisation and profitability of its truck tire operations in the Americas.

Measures so far taken include reducing retail footprint and converting company-owned outlets into partner operations. Continental has also decided to close its retread production in Mexico.

"We are working on additional measures in order to improve specifically the truck tire profitability in North America," Koetz said. "No details to share yet. Once we have more details there, we will communicate."

The German tire maker, however, stressed that it intended to retain truck tires as part of its global portfolio.

"If you want to be a globally leading tire manufacturer, a truck tire is an essential part of your overall business portfolio," Koetz said.

Capacity increase

Continental also plans to increase local tire production in North America to support sales growth and reduce its reliance on imports.

"Yes, we are planning to increase production capacities in North America to improve sales efficiency," Koetz said.

However, he stressed that any investment would need to be economically justified and supported by efficient plant operations.

"Just investing significantly more, building up significant capacities, which you can then not ramp up efficiently is really waste," he said.

Continental expects the additional local capacity to cover its targeted North American sales growth, but does not currently plan a major expansion aimed at significantly reducing its reliance on European production.

The company currently produces around 45% of the passenger car tires it sells in North America locally, including Mexico, with Europe the main source for the remaining supply.

According to Koetz, Continental’s plant in Sumter, South Carolina, could provide additional capacity without requiring a new site.

"Our US plants, especially Sumter, is designed to grow into – or at least has the space, the general setup, the infrastructure to grow into a mega plant," Koetz said.

"So if we have the locations ready to invest into additional capacities, we don't need new locations, which makes obviously also then the investments more efficient."

Factors impacting profitability

Commenting on the reasons behind lower profitability in Americas, Koetz said the region had been affected by three main factors beyond weak truck tire demand: tariffs, operational performance and foreign exchange.

The Covid-19 pandemic, according to Koetz, particularly affected North American operations through workforce fluctuations and difficulties replacing employees, which led to "inefficiencies and operational or a deterioration of the operational performance".

Foreign exchange has also become a significant headwind because Continental continues to produce a substantial proportion of the tires sold in the US in Europe.

"Producing nowadays in euros and selling in dollars simply became much less attractive compared to where we were prior to Corona," Koetz said.

This, he said, was "an impact which has clearly changed the pre-Corona versus today's world".

Mix improvement

Despite the challenges, Koetz said Continental saw further growth opportunities in premium products in North America.

According to Koetz, the company plans to expand its presence in four-wheel-drive and light truck tires, where it is currently underrepresented, while continuing to grow its premium and ultra-high-performance businesses.

"On the underlying mix, the mix opportunity, especially in North America, is at least as positive and healthy as it is in the APAC region and definitely even better than in the European market," Koetz said.

The company also intends to improve manufacturing efficiency and productivity across its existing footprint, with the aim of gaining market share in the US and Canada.

"With these actions, we are convinced that we will improve earnings quality back to the double-digit margin levels Americas is capable of delivering," Koetz said.