Hanover, Germany – Continental AG’s Rubber Technologies Group has seen its earnings more than halved for the first half of 2020, but the group expects a slight recovery in the tire market in the second half of the year.
The segment, which includes Tires Business and ContiTech, reported a 61% year-on-year decline in earnings (EBITDA) to €291 million on 34% lower sales of €2.9 billion, Conti announced 5 Aug.
In the Tire Business, earnings for the first six months declined 41% to €713 million on 23% lower sales of €4.4 billion. Adjusted EBIT fell 63% to €301 million during the period.
Conti attributed the declines to the Covid-19 effect on sales volumes for passenger and light truck tires which it said were “significantly below” the previous year’s level in both the OE business and replacement sector.
Citing preliminary data, Continental said global sales volumes of replacement tires for passenger car and light vehicles fell by around 15% year-on-year in the first half, in the wake of the Covid pandemic.
Conti linked the slump in the first quarter to weak demand in China, while attributing the second quarter decline to containment measures in Europe and North America.
The division also posted an 8% drop in demand for replacement tires for medium and heavy commercial vehicles.
However, the German group expects demand for replacement tires for cars and light commercial vehicles to “normalise” in the third quarter.
“[In the third quarter] For Europe, we still expect volumes to be 10% to 15% lower than the previous year’s figures. In North America, sales volumes are likely to be 5% to 10% lower year-on-year,” it said.
Third quarter volumes in China are set for a year-on-year increase with Conti expecting a 5% increase in demand compared to 2019.
Overall, the automotive group anticipates replacement car tire sales volumes for the third quarter to come in 5-10% lower than the 2019 level.
In the medium and heavy commercial tires segment, the group expects a decline in demand of 5-10% in the third quarter in Europe and North America.