Key facts
- Continental's second-quarter profit exceeded analyst consensus.
- Premium tyre sales and lower raw material costs drove the profit beat.
- The company warned of a reversal in raw material cost benefits in the second half of 2026.
- Continental expects a triple-digit-million-euro hit in the latter half of 2026 due to raw material costs.
- The tyre unit's adjusted operating margin reached 15.3% in Q2.
- Continental is selling its ContiTech division as part of a strategic realignment.
German car parts supplier Continental reported second-quarter earnings that surpassed analyst expectations, driven by strong sales in its premium tyre segment and a favorable raw material cost environment. Despite these positive results, the company issued a warning regarding worsening raw material costs in the latter half of the year.
Continental's Chief Financial Officer, Roland Welzbacher, explained that the tailwinds from lower raw material costs experienced in the first half of 2026 would fully reverse in the second half. This reversal is expected to result in a significant financial impact, potentially a triple-digit-million-euro hit, due to the company's reliance on oil-derived materials for synthetic rubber production. However, Welzbacher indicated that this should not prevent the company from achieving the upper half of its profitability targets for the tyre division.
The company is currently in the final stages of a strategic realignment aimed at divesting non-tyre assets and concentrating on its most profitable businesses. This includes the recent agreement to sell its rubber and plastic division, ContiTech. In the second quarter, while tyre volumes saw a slight decline of 2.3%, the tyre unit's adjusted operating margin improved to 15.3%, exceeding its full-year target range of 13% to 14.5%. Continental's quarterly adjusted earnings before interest and taxes reached €570 million ($656 million). Excluding the ContiTech division, the company projects annual sales between €13.2 billion and €14.2 billion, with an adjusted operating margin of 12% to 13.5% at the group level.