- Positive sentiment on European exchanges; DAX futures gain more than 1%
- Continental (CON.DE) gains 7% after results showed improved operating profits
- German defense sector on upswing; Rheinmetall and Hensoldt shares gain nearly 4%
The mood in the European stock market is positive today, with U.S. indices posting gains, in observance of the Veteran's Day holiday. The session on Wall Street will open at standard hours; bond trading will be halted today. No significant macro releases are scheduled for today.
DE40 chart (M30 interval)
DAX (DE40) futures are recording a very successful session today. The main resistance level is now the levels between 19600 and 19700 points. Buying volume clearly prevails today, with the RSI climbing above 70, signaling overbought conditions.
Source: xStation5
Most companies on European exchanges are up today; the mining and metals sectors are performing poorly, with shares of leading miners BHP Billiton and Rio Tinto retreating. Source: xStation5
Continental on wave of improved profitability; sales lags
Continental AG's shares are on the rise after third-quarter results, with the company reporting a 36% increase in adjusted operating profit (EBIT) to €873 million. Investors liked the increase in EBIT margin to 8.9%, up from 6.3% last year.
- The automotive sector's adjusted EBIT margin rose to 4.2% from 2.8% a year earlier, thanks to efficiency measures and favorable price negotiations with auto manufacturers.
- The increase came despite a difficult market. Continental pointed out that it did so thanks to rigorous cost management and efficiency improvements, reinforced by a new pricing policy in the automotive division.
- Sales fell 4% y/y to €9.8 billion, compared to €10.2 billion in Q3 2023, but profitability in the automotive business improved despite a 4.7% y/y decline in sales (to €4.7 billion).
- Continental revised its annual forecasts, lowering the Group's expected sales to 39.5-42.0 billion euros, compared to the previously estimated 40.0-42.5 billion euros.However, this did not surprise the market
According to Continental, the winter tire business has had a successful start to the year, and sales profitability is satisfactory. The company is still considering spinning off its ContiTech business. The company expects profit growth in the automotive business, thanks to higher production and product volumes. ContiTech, Continental's industrial solutions division, faced challenges from weak demand in Europe and North America. It reported a 9.9% decline in sales, with revenues falling to €1.5 billion and a lower adjusted EBIT margin at 4.5%. The tire division reported solid results (sales up 1.9% y/y to €3.5 billion). Continental is currently expanding its Rayong plant in Thailand to meet high demand in the Asia-Pacific region.
Source: xStation5
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