Continental raises 2026 margin outlook despite rising rubber costs - Startups and venture capital

The tiremaker reported a higher adjusted operating result in the third quarter despite lower sales in its core tire business. It also narrowed its revenue forecast and raised its expected operating margin range, sending its shares up more than 6%.

Continental reported stronger profitability in its tire business in the third quarter, even as sales fell and higher raw-material costs began to weigh on results. Revenue in the company’s remaining core business declined 1.5% year over year to €3.5 billion, while adjusted operating profit rose 7% to €514 million. The adjusted EBIT margin increased to 14.9%, from 13.9% a year earlier.

The company said rising oil and rubber prices, linked in the report to conflicts in the Middle East, are now feeding into its costs. Because Continental buys raw materials three to six months in advance, the effect is delayed. The price increases reduced third-quarter results by a mid-double-digit million-euro amount, with a similar impact expected in the fourth quarter, finance chief Roland Welzbacher told Reuters. The company is discussing higher selling prices with customers.

Continental narrowed its 2026 revenue forecast for its core business to €13.5 billion to €13.9 billion, from a previous range of €13.2 billion to €14.2 billion. It now expects an adjusted EBIT margin of 13.4% to 14.0%, up from its earlier forecast of 12.0% to 13.5%. The improved outlook helped lift the company’s DAX-listed shares by more than 6%.

The group returned to a net profit of €349 million, compared with a loss of €756 million a year earlier. That earlier result had been affected by the separation of automotive supplier Aumovio and the sale of its original-equipment solutions business. Continental has also agreed to sell the remaining ContiTech plastics technology business to investor Lone Star for €4 billion, though the deal has not yet closed.

ContiTech is performing below expectations. Continental now forecasts 2026 revenue of €4.2 billion to €4.4 billion for the business, down from a previous estimate of up to €4.8 billion, and an EBIT margin of 6.5% to 7.5%, compared with its earlier range of 7.0% to 8.5%.

With its disposals, Continental is becoming a pure tiremaker. Welzbacher said results improved again year over year and that the company remained highly profitable, particularly in Europe and Asia. Large tires for SUVs and electric vehicles were among the factors supporting the business.

Sources: Handelsblatt.