On August 5, 2021, Continental AG announced its financial report for the second quarter of 2021. Despite being affected by a series of unfavorable factors, the business performance of the rubber technology sub-group is strong, especially due to the outstanding performance of the tire business group.
Nikolai Setzer, Chairman of the Executive Board and CEO of Continental Group, said: In the rubber technology subgroup, following the good performance of the first three months of this fiscal year, the business continued to grow in the second quarter. Despite the challenges posed by rising raw material prices, Continental's overall performance in the first half of the year remained strong.
According to information disclosed by Continental, group sales in the second quarter of 2021 were 9.9 billion euros, much higher than the same period of the previous year, with a year-on-year increase of 49.7% (affected by the first lockdown of the new crown epidemic, the group sales in the second quarter of 2020 were 6.6 billion euros). Regardless of the scope of consolidation and the impact of exchange rate changes, sales increased by 55.3%.
Compared with the weak same period of the previous year, adjusted profit before interest and taxes increased to 711 million euros (the second quarter of 2020: -635 million euros, an increase of 1.3 billion euros). The adjusted EBIT margin was 7.2% (the second quarter of 2020: -9.8%). Net income totaled 545 million euros (Q2 2020: -741 million euros). In the second quarter, free cash flow excluding the effects of acquisitions, divestitures and splits was 327 million euros (the second quarter of 2020: 1.8 billion euros).
From April to June 2021, the development of the automotive market once again showed significant regional differences. Preliminary data show that the total global automobile production was 18.8 million, a decrease of 8.9%, which was significantly lower than the 20.6 million in the first quarter of this year. Due to severe semiconductor supply shortages, compared with the first quarter of 2021, North America's car production fell 11.5% to 3.2 million units; European car production fell 12.0% to 4.1 million units. Only the Chinese market's production is basically the same as in the first quarter of 2021, at 5.8 million vehicles, an increase of 0.1%.
The rubber technology subgroup once again showed strong strength in the second quarter. Sales were 4.3 billion euros, an increase of 46.9% (the second quarter of 2020: 3 billion euros), and the adjusted EBIT margin was 14.6% (the second quarter of 2020: 1.2%). The natural sales growth rate reached 50.4%. Thanks to the strong performance of the truck and passenger car replacement tire business in the global market, the tire business group performed particularly well. In the segment of electric vehicles, Continental's tires have also been repeatedly recognized.
In 2020, six of the ten electric car manufacturers with the highest sales in the world will choose Continental's German Continental tires as their original tire suppliers. From 2022, Continental will use recycled polyethylene terephthalate (PET, polyester) bottles in tire production to further promote sustainable development. This will involve the use of mechanical methods to extract sustainable polyester yarn from PET bottles to completely replace traditional polyester.
In the coming months, market development will continue to fluctuate. The supply shortage of semiconductors will continue to have a significant impact on automobile production. Last year's passenger car and light commercial vehicle production was 74.6 million, and Continental expects this year to grow by 8% to 10% (previously expected to be 9% to 12%).
Continental is adjusting its full-year expectations for continuing operations (excluding Wisdom Technology). Continental expects that group sales will be approximately 33.5 billion euros to 34.5 billion euros (previously estimated at 32.5 billion euros to 34.5 billion euros), and the adjusted EBIT margin will be approximately 6.5% to 7.0% (previously estimated as 6% to 7%).
