BERLIN — Continental minimize its annual earnings forecast and warned of “lasting penalties” for manufacturing and provide chains if the battle in Ukraine doesn’t ease, with rising power and uncooked materials prices weighing on margins.

The provider almost doubled its anticipated procurement and logistics prices in its tire and ContiTech divisions and cautioned tthat its automotive group sector might find yourself within the crimson, having beforehand forecast a margin of 0 % to 1.5 % for the division.

“Detrimental results from price inflation for key inputs…. in addition to power and logistics… have gotten considerably extra materials,” the provider stated in an announcement on preliminary first-quarter outcomes.

“Within the occasion the geopolitical state of affairs, specifically in Jap Europe, stays tense or worsens, it might end in additional lasting penalties for manufacturing, provide chains and demand,” the provider stated.

Continental reported a first-quarter earnings margin of 4.7 %, down from 8.5 % final 12 months, at the same time as consolidated gross sales rose to 9.3 billion euros from 8.6 billion within the first quarter of 2021.

The provider stated it anticipated industry-wide manufacturing of passenger automobiles and lightweight business autos to extend by simply 4-6 % 12 months on 12 months in 2022, down from its forecast of 6-9 % in March.

As such, it anticipated its earnings margin for the 12 months to be round 4.7-5.7 %, down from its earlier forecast of 5.5-6.5 %.

Continental stated on Tuesday it had quickly resumed tire manufacturing for passenger automobiles at its plant in Russia on Tuesday after suspending it in early March following Russia’s invasion of Ukraine, to guard native employees who might in any other case face felony fees.

Continental, primarily based in Hanover, Germany, ranks No. 6 on the Automotive Information record of high 100 international suppliers, with 2020 gross sales to automakers of $29.7 billion.