Continental raises 2026 outlook on tyre business strength

(Specifies wording in paragraph 5 to talk about average oil price assumption rather than forecast.)

By Emanuele Berro and Conrad Kuepper

Nov 4 (Reuters) - German car parts supplier Continental raised its 2026 profitability outlook on Wednesday after strong demand for high-margin tyres helped it beat third-quarter earnings expectations, despite rising raw-material costs.

Shares were up around 6% at 0857 GMT, on track for their best day since May and among the top gainers of German blue-chip index DAX.

“Large, high-performance tires are a key driver of our business. However, higher raw-material prices are increasingly affecting our earnings and will impact us even more in the fourth quarter,” CFO Roland Welzbacher said.

Continental, which relies on oil‑derived raw materials to make synthetic rubber for its tyre production, had previously warned that significantly higher oil prices due to the war in the Middle East over a longer period would drive up costs.

Welzbacher told Reuters that Continental's assumption was now an average oil price above $90 per barrel for 2026, up from $85 a barrel expected in May.

"The anticipation was that in the fourth quarter it would go down. It didn't happen so far," he said, adding however that it would not impact the cost assumptions previously made.

Tyre production volumes were lower than initially anticipated, while higher raw-material prices typically affect earnings with a delay and can be partly offset by positive inventory valuation effects, he said.

In August, it said it expected low to mid triple-digit-million-euro raw material tailwinds seen in the first half of 2026 to fully reverse in the second half.

The Hanover-based company expects a full-year operating profit margin of 13.4% to 14%, excluding the discontinued ContiTech operations, up from a previous range of 12% to 13.5%.

It reported third-quarter adjusted earnings before interest and taxes (EBIT) of €514 million, above the €480 million consensus.

(Reporting by Emanuele Berro and Conrad Kuepper in Gdansk, editing by Milla Nissi-Prussak and Matt Scuffham)