BERLIN -- Continental expects a market upturn in the second half and strict cost discipline to help it achieve its full-year profit guidance, after a downturn in car demand dragged net profit down 22 percent in the first quarter.
The supplier said net profit for the first three months came in at 575 million euros ($644 million) compared to 738 million a year earlier.
"The start to the new fiscal year was challenging, as expected," Chief Financial Officer Wolfgang Schaefer said in a statement. "We did, however, already start to heighten our cost discipline last year. We are benefiting from this now."
Daimler, VW and BMW posted sharply lower first-quarter earnings as the auto sector struggles to keep up investments into electric and autonomous vehicles as well as preparing their combustion-engine technologies for stricter emissions rules.
Continental last month said its adjusted margin on earnings before interest and taxes (EBIT) had fallen to 8.1 percent from 9.7 percent a year ago, hit by a downturn in car demand as sales in China, the world's largest car market, slowed for a ninth month running.
Continental's EBIT fell to 884 million euros in the first quarter, compared with 1.066 billion euros a year earlier, even as sales remained flat.
Sales in its automotive group unit fell 1.8 percent to 6.7 billion euros in the first quarter, while the division's EBIT margin shrank to 5.4 percent from 8.2 percent a year earlier, hurt by the sluggish market environment.
The supplier said it expected a market upturn in the second half of the year and confirmed the outlook it gave in January: an adjusted EBIT margin of 8 to 9 percent this year, instead of last year's more than 9 percent.
Separately, the supplier said a spin-off of its powertrain division will depend on a recovery of the auto market. The company last month pushed back an initial public offering of the powertrain division to 2020, having initially envisioned an IPO in the second half of this year.
"We have nothing to give away. If the markets are not in the right shape, it can also be later," Schaefer said.
Continental ranks No. 4 on the Automotive News Europe list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $35.9 billion in 2017.
