BERLIN -- Continental expects the auto industry's microchip shortage to drag on for months, CEO Nikolai Setzer said on Tuesday.
The negative impact will be felt especially in the first quarter, Setzer said in a video call on Tuesday.
He said the general situation will ease in the course of the second quarter. However, in some areas he expects the shortage to drag on for the entire year.
Continental said it expects 2021 sales and profit margin to grow despite expected additional costs due to chip shortages.
The company expects sales to reach 40.5 billion to 42.5 billion euros ($48 billion to $50.4 billion) and its margin on adjusted earnings before interest and tax (EBIT) to hit 5 to 6 percent this year, the supplier said in a statement. That compares with analysts' average estimate of 6.3 percent.
The outlook incorporated additional logistics expenses of around 200 million euros from supply chain constraints related to semiconductor components and additional research and development expenses of 200 million to 250 million euros in its autonomous mobility and safety unit, the group said.
Continental said it will adjust the outlook depending on the outcome of the spin-off of its powertrain unit Vitesco which is planned in the second half of the year.
Continental swung to a 718 million euro operating loss last year, while the adjusted result more than halved to 1.3 billion euros. The adjusted EBIT margin slumped to 3.5 percent.
The company reported a 13 percent drop in group sales to 37.7 billion euros in 2020, in part due to falling revenue in the automotive, rubber and powertrain divisions.
It posted a free cash flow of 1.109 billion euros in 2020 before acquisitions and carve-out effects for the group, down from 1.343 billion euros a year earlier.
Continental said its profitability will be reduced this year because of the shortage of semiconductors and economic fallout from the coronavirus pandemic.
The start of the year "has been subdued so far due to the shortage of semiconductors," CFO Wolfgang Schaefer said on Tuesday. "The effects of the ongoing coronavirus pandemic remain a source of uncertainty too. All in all, 2021 will therefore remain challenging."
Volkswagen Group last month said bad planning on the part of its suppliers has compounded a computer chip shortage blighting the global auto industry, claiming it gave ample notice that the coronavirus hit to car production would be limited.
Schaefer said, however, that Continental had informed clients about a potential chip shortage right away.
"I don't think we informed our clients too late. We started very early, as far as I know we were the first, to talk to the OEMs and inform them about the situation," Schaefer told Reuters.
Schaefer said since 2017 the automotive industry had consistently ordered more from chip and wafer makers than it actually bought. Semiconductor makers have learned their lessons and allotted capacity to other industries as a result, Schaefer said.