Continental spinoff Vitesco struggles in market debut

Continental delayed carving out Vitesco by two years due to unfavorable market conditions.

September 16, 2021 04:21 AM

Reuters

Vitesco

BERLIN -- Shares of Vitesco Technologies were broadly flat on Thursday in a volatile market debut that highlights the challenges faced by the German auto supplier spun off from Continental.

The stagnant share price, combined with a drop in the price of Continental's shares compared with Wednesday's close, meant that Continental shareholders were left with a drop in the value of their holdings as a result of the spinoff.

Continental shareholders received one Vitesco share for every five Continental shares they owned. At close, that was worth about 5 percent less than five Continental shares at yesterday's market close.

Continental, among the world's largest auto suppliers, delayed the spinoff of Vitesco -- which produces powertrains for internal combustion engine (ICE), hybrid and electric cars -- by two years due to unfavorable market conditions worsened by the coronavirus pandemic.

"We were confronted by developments that no one had foreseen," Vitesco CEO Andreas Wolf said at the Frankfurt stock exchange, adding "the corona crisis fully confirmed our strategy... e-mobility is booming."

Vitesco shares started trading at 59.80 euros per share and swung between 56.89-66.88 euros in the course of the day. At the end of of the afternoon, they traded at around 58.7 euros per share, giving the company a market value of 2.34 billion euros ($2.75 billion).

In his own words

Vitesco CEO Andreas Wolf took time during the supplier's stock listing day on Sept. 16 to speak with Automotive News Europe Managing Editor Douglas A. Bolduc. He shared some insights on the process and provided some advice to the next automotive company prepaing an initial public offering, Volvo.

While the powertrain components maker currently earns the vast majority of its revenue from parts for cars with traditional powertrains, Wolf told Reuters this month he hopes to break even on sales for electric vehicle components by 2024 and reap three quarters of revenues from electric vehicle parts by 2030.

Wolf told Automotive News Europe that the supplier's order book for e-components is in the multibillions.

"We were sitting on more than 13 billion euros in orders for our products related to electrification [at the end of 2020], he said in a recent ANE Podcast.

That number rose to 14.8 billion euros at the end of the first half of 2021.