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Continental Shares Jump as Analysts Note “Pricing Progress” at Auto Unit

Shares of Continental (ETR) experienced a notable surge on Thursday following optimistic commentary about its automotive unit’s performance in the second quarter.

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Continental, a German tire maker, indicated in its pre-close call prior to quarterly earnings on August 7 that its automotive division had shown positive progress in pricing. Analysts, reacting to this update, highlighted significant improvements in price realization within the automotive segment.

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Specifically, analysts from Stifel noted that Continental’s efforts in price realization appeared tangible in the second quarter, leading them to project higher quarterly adjusted earnings before interest and taxes (EBIT) for the automotive unit. They estimated earnings of 174 million euros, surpassing Visible Alpha’s consensus of 16 million euros. For the entire group, they anticipated earnings of 704 million euros, a 26% increase over expectations.

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Continental also emphasized its ongoing cost-cutting initiatives, expected to deliver substantial savings in the latter half of 2024. These efforts are projected to result in expense reductions ranging from high-double to low-triple digits for the full year.

Despite challenges such as weak demand in Europe, Continental remains committed to achieving its full-year auto unit margin target of 3% to 4%, buoyed by cost savings and improved pricing dynamics.

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