Continental Warns of Modest Auto Impact from U.S. Tariffs

Continental stated that it anticipates only minimal impact on its automobile sector from American tariffs on vehicle components, thanks to a significant portion of imported goods meeting the requirements of the USMCA trade deal.

The company stated on Wednesday that discussions with clients and vendors are still taking place." "According to the group, talks with customers and suppliers continue as of Wednesday." "On Wednesday, the organization mentioned that negotiations with buyers and providers remain active." "The group reported on Wednesday that conversations with consumers and partners are continuing." "As of Wednesday, the group noted that dealings with customers and suppliers are still underway.

The firm stated that worldwide light-vehicle manufacturing levels are expected to decrease marginally by between one and five percent during the second quarter.

The team anticipates reduced sales and an adjusted operating profit margin expected to fall near the top of its forecast for the auto division, which it plans to go public in September.

In general, Continental anticipates that the division will experience progress relative to last year's second quarter due to additional pricing contracts finalized in 2024, which have provided a stronger foundation for this year.

The company anticipates a small decline in sales for its tire segment and an adjusted EBIT margin near the bottom of its forecast range, attributing these challenges to currency fluctuations and trade barriers.

The ContiTech division is expected to show a major drop when compared to the previous year. Earlier this year, the company announced plans to sell ContiTech—an entity that produces items like hoses and conveyor belts along with materials used in automotive interiors—by 2026.

In addition to President Trump's tariffs, the European automobile industry deals with declining demand, a slow-growing electric vehicle market, and intense rivalry from Chinese companies.

Continental stated that it still anticipates adjusted free cash flow ranging from 600 million euros to 1 billion euros ($708.5 million to $1.18 billion) for this year.

Nevertheless, it pointed out that the second quarter typically tends to be relatively neutral concerning free cash flow production. "We anticipate this will also occur in 2025, as continuous restructuring and spin-off activities result in a somewhat negative outlook for free cash flow," it stated.

The team will release their second-quarter financial report on August 5th.

Contact Andrea Figueras at andrea.figueras@wsj.com