Continental sees no signs of an imminent wave of bankruptcies in the supplier industry.

"If we look at our supplier portfolio, we cannot see that there is an increased risk of insolvency," said CEO Nikolai Setzer at the Club Hamburger Wirtschaftsjournalisten on Wednesday evening. Nor do we see an increased trend towards insolvency on the market. However, the Dax group is looking at the situation very closely. The Württemberg-based automotive supplier Allgaier has just slipped into insolvency, while the Franconian cable specialist Leoni recently came close to bankruptcy.

Last year, the shortage of semiconductors meant that car manufacturers' margins developed positively, while this was obviously not the case for suppliers. However, the system of manufacturers and suppliers can only work if the costs are not imposed on just one side. Last year, Continental succeeded in passing on the increased costs, for example for the procurement of scarce electronic components, to customers through higher prices. "We are also assuming that we will be able to do this this year," said Setzer. The trend in the supplier industry shows that this is more difficult in the first half of the year than in the second half.

Last year, additional costs of 3.3 billion euros for energy, logistics and materials weighed on returns. In the current year, Conti management estimates these costs at 1.7 billion euros. This year, the third-largest German supplier in terms of turnover is aiming for a margin of between 5.5 and 6.5 percent (2022: 5.0 percent), with a target of two to three percent in the core automotive business. The Group recently confirmed its medium-term return target.

(Report by Jan C. Schwartz. Edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)