Continental posts $1.3B net loss for 2019 as car demand slumps

FRANKFURT -- Continental said it would step up cost savings after posting a 1.2 billion-euro ($1.34 billion) net loss in 2019, sending shares sharply lower as analysts criticized management's handling of an industry downturn.

Cost-cutting plans will be presented in May because worldwide car production was now expected to fall for the third year in row, by between 2 percent to 5 percent, CEO Elmar Degenhart said in a statement on Thursday.

Degenhart also said that forced lay offs may be necessary.

Continental announced non-cash goodwill writedowns of 2.5 billion euros and said it expected to deliver and adjusted earnings before interest and taxes (EBIT) margin of 5.5 percent to 6.5 percent this year, disappointing analysts.

"Conti remains a very large company which is not moving fast enough in this rapidly declining volume environment based on a legacy cost structure designed for volume growth," analysts at Evercore ISI said in a note on Thursday.

Continental reported an almost flat full-year revenue at 44.5 billion euros.

Adjusted earnings before interest and taxes (EBIT) was down 22 percent to 3.2 billion euros in 2019.

Degenhart said potential supply chain disruptions, caused by coronavirus travel restrictions, had been avoided by switching from shipping parts to using air freight.

Production and logistics were expected to normalize in the second quarter of the year, he 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 $37.8 billion in 2018.