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Continental warns weaker markets, electric shift to hit margins

Reuters  |  FRANKFURT 

(Reuters) - German warned of a drop in profitability this year, blaming a downturn in markets and the industry's costly shift from combustion engines towards electric vehicles.

The group said on Monday it expected an adjusted operating (EBIT) margin of 8-9 percent this year, down from a forecast of "more than 9 percent" in 2018.

According to preliminary figures, its adjusted EBIT margin came in at 9.2 percent in 2018, Continental said.

"As feared, the decline of the automotive markets intensified significantly once again in the fourth quarter," said.

"This, combined with the profound changes in our industries, is reducing our growth rate."

Continental's warning comes after rival lowered its operating profit guidance and carmakers and announced sweeping job cuts in response to falling demand.

On Monday, Chinese auto industry association said domestic sales fell 13 percent in December, leading to a 2.8 percent drop for the full year, the first annual contraction since the 1990s.

Shares in Continental, which will release 2018 results on March 7, fell 2.2 percent in early trade.

The group also said it expected consolidated sales of 45 billion to 47 billion euros ($52-54 billion) in 2019, compared with 44.4 billion in 2018.

($1 = 0.8728 euros)

(Reporting by Christoph Steitz, Editing by Edward Taylor and Mark Potter)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 14 2019. 13:46 IST
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