Continental burns cash as Q2 sales slump nearly 40%

BERLIN — Continental endured a nearly forty p.c 12 months-on-12 months decline in team revenue all through the next quarter, causing the German supplier to burn off cash and forcing it to refrain from delivering an outlook for the 12 months.

Consolidated team revenue declined by 39.8 p.c to 6.62 billion euros ($7.6 billion), the organization stated Monday as it documented some benefits early. Running margin was minus 9.6 p.c and documented free of charge cash move was a destructive 1.78 billion euros ($2 billion.)

The automotive sector, spearhead of Germany’s export-pushed financial system, has been hammered by the coronavirus pandemic which has struck as it was now battling amid a change to electric powered automobiles.

German carmaker Daimler, reporting a next-quarter decline previous 7 days, stated it would halt building Mercedes-Benz sedans in the United States and Mexico as it seeks to lower costs.

Hanover-based Continental’s 3 working divisions all endured steep revenue declines, with Automotive Technology down 45.6 p.c on an natural basis, Rubber Technology off by 33.1 p.c and Powertrain Technology decrease by forty.8 p.c. None turned a profit.

Commenting on its destructive free of charge cash move, Continental stated this was generally thanks to a deterioration in its working profitability as effectively as destructive doing the job money outcomes triggered by recent revenue volatility that could soon reverse.

The organization had liquidity reserves of around 10 billion euros ($11.four billion) at the conclude of the next quarter, consisting of 2.five billion euros ($2.9 billion) in cash and cash equivalents and unused credit strains of 7.7 billion euros ($8.8 billion.)

All those reserves had been up from 6.8 billion euros ($7.8 billion) at the conclude of the initial quarter, soon after the organization issued bonds and expanded its lender strains of credit.

“Although the business enterprise circumstance enhanced substantially around the system of the next quarter, the surroundings continues to be characterised by appreciable uncertainty thanks to the ongoing coronavirus pandemic,” Continental stated.

“It consequently continues to be tough to gauge achievable more adverse outcomes on manufacturing, the supply chain and demand,” the organization added, expressing it was however not in a posture to give an outlook for 2020.

Continental will report complete next-quarter benefits on Aug. five.