Continental raises earnings outlook after strong third quarter

Hanover, Germany – Continental has raised its full-year earnings outlook following a strong third quarter, supported by improved profitability in its European tire business.

The German tire maker reported adjusted EBIT of €514 million for the three months ended 30 Sept, up 6.7% year-on-year, while the adjusted EBIT margin increased to 14.9% from 13.9%.

At €3.5 billion, consolidated sales came in 10% lower than the third quarter of 2025, with the decline mainly attributed to the sale of the Original Equipment Solutions (OESL) business area in early February.

"We have raised our outlook in line with these results and head into the challenging final stretch of the year in a strong position," said CEO Christian Koetz 4 Nov.

Continental now expects a full-year adjusted EBIT margin of 13.4–14.0%, compared with its previous forecast of 12.0–13.5%.

The company also raised its adjusted free cash flow outlook to €1.0–1.3 billion, from €0.7–1.1 billion previously.

Continental also narrowed its full-year sales forecast to €13.5–13.9 billion, from the previous range of €13.2–14.2 billion.

The company did not provide a specific adjusted EBIT forecast for the year.

According to the German group, the improved third-quarter performance was driven primarily by "strong earnings performance in Europe," as well as "very good results" in Asia.

Overall, higher sales of ultra-high-performance (UHP) tires, alongside slightly positive exchange-rate effects, lower tariff impacts and commercial measures taken in response to higher raw-material prices, contributed to the positive performance.

In the third quarter, Continental's Europe, Middle East and Africa (EMEA) business reported sales of €1.9 billion, broadly unchanged year-on-year, while the adjusted EBIT margin improved to 18.7% from 17.7%.

The group attributed the improvement to higher sales of UHP tires, particularly in the winter-tire business, alongside higher truck tire sales.

Continental described EMEA as the "earnings backbone" of its tire business, accounting for more than half of global tire sales.

In the Americas, however, sales declined 5% to €1.1 billion amid "weak replacement markets," particularly in South America.

Despite the challenging conditions, the regional adjusted EBIT margin improved slightly to 8.7% from 8.5%.

Here, Continental said profitability had continued to lag behind EMEA and APAC, affected by factors such as geopolitical developments, tariff-related uncertainties, exchange-rate effects, subdued demand and underutilisation in the truck-tire business.

Continental said it aims to return the region to "double-digit margins" by increasing the sales share of UHP and premium tires, improving its utilisation of production capacity and strengthening its market position in the US and Canada.

In Asia-Pacific, third-quarter sales increased 4.7% year-on-year to €476 million, driven by strong OE business and positive currency effects.

The region maintained a high adjusted EBIT margin of 18.6%, compared with 19.0% a year earlier.

Asia-Pacific, said the group, “remains a growth region in which Continental plans to further expand its presence, particularly in China.”

The focus here is on close collaboration with established OE customers and rapidly growing Chinese vehicle manufacturers, whose global expansion is opening up opportunities in other regions as well.

The group also noted further growth potential in the ASEAN countries, Japan and India.

The German manufacturer said it was pursuing “disciplined, selective growth” focused on the premium segment for UHP tires.

ContiTech performance

The ContiTech group sector, which is earmarked for divestment, recorded sales of €1.1 billion in the third quarter, down 26% compared with €1.5 billion a year earlier.

The group linked the decline in sales mainly to the divestment of the OESL business area.

Excluding currency effects and changes in the scope of consolidation, sales declined 1.7% year-on-year.

The segment's reported adjusted EBIT margin was 8.5%, but stood at 4.4% excluding the effects of IFRS 5 accounting treatment, down from 8.5% a year earlier.

Overall, the German group said ContiTech’s sales and earnings margin were impacted by “weak demand, a slower-than-expected market recovery and higher raw-material costs.”

According to Continental, implemented cost-cutting measures, operational improvements and commercial initiatives partially offset these negative effects.

In addition, Continental described the recent increase in order intake, particularly in the trading business, as "encouraging."

Commenting on the overall performance, CFO Roland Welzbacher said Continental remained "highly profitable, particularly in Europe and Asia."

Welzbacher went on to highlight large, high-performance tires as “a key driver of our business."

"However, higher raw-material prices are increasingly affecting our earnings and will impact us even more in the fourth quarter," Welzbacher warned.

Continental also noted that weak automotive markets had weighed on its OE business, with global vehicle production declining around 1.6% year-on-year during the quarter.

Looking ahead, the company plans to expand its UHP tire portfolio by more than 650 new specifications by the end of 2027, targeting growing demand for larger tires for SUVs and electric vehicles.

UHP tires accounted for 62% of Continental-brand passenger-car tire sales in 2025, compared with 49% in 2020.