German automotive suppliers under pressure after Valeo cuts forecast

PSA Peugeot results expected

Shares in the German automotive supplier Continental have been under pressure on the stock market on Tuesday following the French supplier Valeo cutting its outlook. Valeo has lowered its sales and margin targets for this year due to subdued car production in Europe and China.

Continental shares fell by more than 4 per cent in early trading. Shortly before midday, they were still 3.4 per cent lower at EUR 101.70. Shares in the lighting supplier Hella also lost ground, falling by 2.4 per cent to EUR 62.60.

Outlook cut

Valeo had already lowered its outlook in April and has now done so again. The company now expects sales of around EUR 19.5 billion this year, compared with a previous target of EUR 20 billion. The adjusted operating margin is also expected to be lower at 4.4 per cent instead of 4.8 per cent.

"The market environment in China is unlikely to improve significantly in the second half of the year," said Valeo CEO Jacques Aschenbroich. The company is also suffering from the shortage of semiconductors, which is causing production disruptions in the automotive industry.

PSA results awaited

Investors are also awaiting the results of the French carmaker PSA Peugeot, which are due to be published on Wednesday. Analysts expect that PSA will benefit from the high demand for cars in China and Europe. The company had already raised its outlook in July.