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Investing.com -- Continental shares slipped 2% Tuesday after the company reported a slightly weaker-than-expected second-quarter margin in its core tyre unit, citing pressure from U.S. tariffs and unfavorable currency movements.
The adjusted EBIT margin in the tyres division stood at 12%, down from 14.7% a year earlier and just below the 12.5% consensus forecast.
The tyremaker had already lowered its full-year margin targets for both the tyre segment and the broader group in June.
The latest report comes during Continental’s restructuring. The company plans to spin off two of its three divisions as it shifts toward becoming a dedicated tyre manufacturer, aiming for greater resilience in a market impacted by trade tensions.
In contrast, the automotive unit delivered a 4% profit margin in the quarter, slightly ahead of the 3.8% expected, helped by cost-cutting and continued pricing discipline. The company said this performance reflects “positive momentum” ahead of the planned listing of the division on September 18.
"Q2 earnings are a miss with weaker margins in Tires driven by FX/tariffs & strong margin improvement in Autos," Jefferies analysts led by Michael Aspinall said in a note.
"This will be the last earnings report before the spin (18th Sept) with future share price performance dependent on the trajectory of earnings & updates on asset sale processes," they added.
At the current valuation, the broker said it sees greater upside in Michelin (EPA:MICP).
Operating cash flow fell to €258 million in the second quarter from €557 million a year earlier.
Adjusted free cash flow swung to a negative €166 million, compared with a positive €147 million in the same period last year.
Continental reaffirmed its segment guidance for 2025.