Russia’s invasion of Ukraine has led German technology firm Continental to suspend its Russian tyre operations in Kaluga, and cut all imports to and exports from Russia. It said it could face “lasting consequences” to supply chains, production and demand from what it described as instability in Eastern Europe. Revenue from Russia represents less than 1% of its global revenue and it does not have any plants in Ukraine, Continental adds.
The company sold goods from the Kaluga plant, which makes rubber, tyre, and plastic products, to some neighbouring states, as well as the domestic market.
Meanwhile, Continental has seen a profit for 2021 after two years of losses and forecast higher sales this year while warning about the potential impact of the Ukraine crisis.
It still forecast 6%-9% growth in 2022 in global production of passenger cars and light commercial vehicles, expecting this to boost its sales to EUR38 billion-40 billion from EUR33.8 billion euros in 2021 and raise its margin to 5.5%-6.5%.
But it said it expected a subdued start to the year and a rise in procurement and logistics costs of EUR2.3 billion.
The company said its outlook did not factor in the possible impact of the Ukraine crisis, but said a prolonged crisis could reduce sales and earnings.
“In the event the geopolitical situation, in particular in Eastern Europe, remains tense or even worsens, it can result in lasting consequences for production, supply chains and demand,” Continental said.
Continental, which launched a costly restructuring programme after a downturn in car demand in 2019, reported 2021 net income of EUR1.5 billion.
The restructuring programme, involving cost cuts and spinning off its powertrain division Vitesco, is underway.