Continental is under pressure to change as the automotive industry shifts toward electric vehicles, which require fewer parts than gasoline and diesel-powered cars.
Continental named Setzer, 49, CEO in November, replacing Elmar Degenhart, 61, who stepped down for health reasons. Degenhart had sketched out an overhaul plan that includes shifting or eliminating as many as 30,000 jobs. Setzer joined Continental in 1997 and was previously head of its core automotive division.
Continental said it’s planning to double down on the growing sectors of vehicle software, high-performance computers for cars, connected and autonomous driving, digital services for fleet and industrial clients and its tires and ContiTech businesses.
Continental rose as much as 5.5 percent in early Frankfurt trading, valuing the company at about 24 billion euros ($29 billion). That’s much less than the 37.5 billion euros the company aims to generate in sales this year.
Vitesco spinoff
The company said it will spin off its powertrain unit Vitesco next year. The move may help restore investor confidence that Continental can push through structural changes and focus on areas that are key for the industry’s shift toward electric mobility.
The move was planned for last spring, but CFO Wolfgang Schaefer said that conditions in both the equity and financing markets at time were so bad “that there would have been sustainable damages to the company” if it had happened. Now, he said, lending terms are looking better, especially toward the second half of 2021, and stock markets have recovered. “We don’t see a block anymore,” he said. “The proceedings (for an IPO) are well under way.”
Vitesco will hold its own capital markets day in March, Schaefer said.
Last month, Continental said it expects its profitability to shrink for the fourth time in the last five years. It had earlier predicted a margin of 5.5 percent to 6.5 percent but withdrew that forecast in April, citing the COVID-19 pandemic.
