By Emma-Victoria Farr
FRANKFURT (Reuters) – Auto parts and components supplier Aumovio, spun off from German tyre maker Continental, listed on the Frankfurt Stock Exchange on Thursday with a total market value of about 3.5 billion euros ($4.14 billion).
The spin-off is part of the Hanover-based parent company’s strategy to increase its profitability by breaking up. Continental shareholders received an additional Aumovio share for every two shares they hold via the listing.
The new company, which has about 100 million in total shares outstanding, opened at a price of 35 euros and traded at 34.64 euros at 0940 GMT.
Reflecting some of the loss in value from the split, shares in Continental traded 19.5% lower, but the combined effect still left its investors with a net gain of more than 4% after receiving Aumovio shares.
COST CUTTING
Aumovio CEO Philipp von Hirschheydt said the separation would result in faster decision-making, but added that a “turbulent and disruptive” car parts market meant that cost cuts would remain on the agenda.
“We have to permanently think about adjusting our cost structure. At this point, we have to become one of the most efficient companies in the industry,” he told Reuters from the Frankfurt trading floor.
Aumovio was listed in the main DAX index for one day on Thursday alongside Continental, and, as a spin-off, will not receive fresh capital from the new listing.
Its debut marks the first listing this year on Frankfurt’s Prime Standard, a segment of the exchange reserved for companies complying with higher transparency standards.
With the Aumovio spin-off and the planned sale of its rubber and plastics division, ContiTech, Continental is aiming to focus on its tyre business, which boasts a profit margin of around 13% and represents the company’s largest earnings pool.
INCREASED SALES TARGETS, BUT A BLEAK LANDSCAPE
Aumovio, which manufactures brakes and safety systems, vehicle software, displays and electronics, has over 86,000 employees at more than 100 locations in 25 countries worldwide.
Continental has said the spun off entity is targeting a long-term increase in sales to over 24 billion euros from 19.6 billion euros last year, with an adjusted EBIT margin in the range of 6% to 8%.
It will have to overcome a bleak landscape, however, as auto suppliers and car manufacturers struggle with weak European demand, tough competition in China, and high U.S. auto import tariffs.
Trade tensions and geopolitics curtailed European listings this year. However, following an uptick in sentiment, some, including Swiss Marketplace Group in Zurich and prosthetics manufacturer Ottobock in Frankfurt, are now taking the plunge.
($1 = 0.8449 euros)
(Reporting by Emma-Victoria Farr, Ludwig Burger, Ilona Wissenbach and Alexander Huebner; Editing by Joe Bavier)
