Continental Earnings: Solid Revenue Growth but Mixed Margin Result, Guidance Slightly Lowered

Narrow-moat-rated Continental reported second-quarter earnings per share before special items of EUR 1.56, missing the EUR 1.90 FactSet consensus by EUR 0.34 but EUR 2.77 better than the EUR 1.21 loss a year ago as the chip shortage lessened. Consolidated revenue beat consensus by EUR 37 million, rising 10% to EUR 10.4 billion from EUR 9.4 billion last year while organic revenue increased 12%. Automotive organic revenue jumped 20%, outperforming a 15% increase in global light vehicle production by 5 percentage points thanks to new business and increased volume, partially offset by some customer price recoveries being delayed. Tire organic revenue rose 6%, even though volume slipped 3%, due to pricing and mix. ContiTech organic revenue rose 7% mostly on nonauto pricing and automotive volume growth, but weaker industrial volume.