Continental Sees Mild Weather Weighing on Winter Tire Demandby
Warm temperatures in key regions hurt sales this season
Continental forecasts market slightly below last year level
Continental AG said recent weeks of unusually warm weather reduced demand for winter tires, adding to headwinds triggered by an economic slowdown in China.
Sales of the tires this season probably will be slightly below levels of a year ago, with the effect of the weather moderated in part because last season’s sales were lower as well, Continental said Tuesday. The manufacturer said it expects its own sales to be in line with market developments, stabilizing at more than 20 million winter tires.
Mild weather in almost all its important markets “has most likely led to a tempered winter tire business this year," the Hanover, Germany-based company said in an e-mailed response to questions.
Winter tires are a particularly lucrative segment of the business for Continental, Europe’s No. 2 tire producer, and its competitors. In a departure from its three previous statements, Continental kept its sales forecast steady at more than 39 billion euros ($42 billion) instead of increasing it in November. The parts maker cited dropping production volumes in China, the world’s biggest auto market.
The shares dropped as much as 1.1 percent, reversing earlier gains, and were down 0.1 percent to 215 euros at 12:28 p.m. in Frankfurt.
The company might also lose sales in the wake of Volkswagen AG’s diesel-engine manipulation scandal but should be able to compensate with growth elsewhere, Chief Executive Officer Elmar Degenhart told Boersen-Zeitung last month. The passenger-car diesel market is facing an uncertain future outside Europe.