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Continental predicts higher margins; Russia operations will be sold

Berlin - Continental expects the increase in sales to drive the margins this year, as it moves beyond supply-chain disruption and the impairments in Russian assets that in 2022 contributed to a fall in the net income of approximately half, the supplier said in a statement.

Announcing the results on Wednesday, CEO Nikolai Setzer also said that the company was selling its operations in Russia, including its factory in Kaluga.

"War is the reason for our controlled Russian withdrawal. This means selling our activities, including our factory in Kaluga. We are in the advanced stages of the sales process," said Setzer.

Last year's yield was undermined by a deterioration of assets of 87 million euros (91.70 million dollars) of its operations in Russia, as well as negative special effects of around 1 billion euros due largely to high interest rates.

"The year 2022 was very challenging for us ... The war against Ukraine has led to higher prices of raw materials, semi -bred products, energy and logistics," said Setzer.

Continental suspended production at its Kaluga plant, Russia, after Moscow launched its Ukraine invasion in February last year.

The supplier also stopped imports and exports of the country, but said in April that it had temporarily resumed operations to protect local workers from criminal charges, without giving more details.

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The company expects a margin of 5.5-6.5 percent for the year on combined sales of 42-45 billion euros, compared to 39.4 billion euros last year.

In January, the supplier reported preliminary results and said that its margin by 2022 was at the lower end of its 5 percent prognosis.

Continental incurred 3.3 billion euros in additional costs in 2022 and expects 1.7 billion additional euros this year due to the increase in the cost of materials, energy, logistics and salaries and salaries.

Net income fell to 67 million euros from 1.4 billion last year.

The global car market experienced some recovery last year due to the impact of pandemic and economic weakness.

Global car production increased by 7 percent and continental demand for the car segment increased by 26 percent.

The company predicted on Wednesday an increase in world car production from 2 to 4 percent in 2023, in line with the forecast of the German automobile association in January.

Automobile production remains lower than before pandemic.

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