Earnings for the first half of the year fell from DM118.7m to DM31.2m (pounds 12.7m). 'Business is worse than we had expected earlier this year, especially for tyres and technical products in Europe,' the company said.
The drop in profit came despite lay-offs, which reduced the manpower in existing businesses by 7 per cent. It marks a relapse following last year's recovery to a DM133m profit from a loss of DM128m in 1991. Continental's poor performance then encouraged Pirelli to suggest a merger, which was rejected after a drawn-out series of negotiations.
The group was hit this year by falling car sales in every European country except Britain. New car tyre sales fell by 8 per cent and van tyre sales by 20 per cent. Continental said that only a stable replacement market stopped the falls matching the 20 per cent drop in the European car market and the 40 per cent fall in commercial vehicle sales.
The company's General Tire subsidiary in the US saw slightly higher sales and a reduced operating loss, with a 6 per cent increase in truck sales compensating for lower prices.
Continental still expects a profit for the full year. Further job cuts are planned on top of 5,000 already made this year.Reuse content