By Victoria Waldersee

BERLIN (Reuters) -Continental said it was fighting for price increases in negotiations with customers and seeking ways to further cut inventory to improve its automotive business performance.

The German auto parts supplier is betting on higher pricing and a focus on premium products to compensate for a declining market in its tyres sector in North America and Europe, which together make up around 70% of its total sales.

Chief Financial Officer Katja Duerrfeld said she did not expect Continental to return to pre-COVID levels of working capital, adding on Wednesday’s earnings call that she forecasts it will fall by around 10% from current levels.

“We are working hard to determine the right level of inventory for the different parts and components we have.”

“We are fighting for our new price negotiations … to make sure we get what we deserve for the products and services we provide,” Duerrfeld added.

Asked about Continental’s position on ongoing negotiations over improved pay and benefits with the United Auto Workers in the United States, Deurrfeld said their demands were “strong” and would lead to a “new category” of cost inflation.

Continental said it currently expects increased costs of 1.4 billion euros ($1.54 billion) from wages, salaries, energy and logistics.

It said it had struggled with higher logistics costs as well as currency change effects primarily from the Chinese yuan and Mexican peso in the second quarter but expected normalisation in the second half.

Continental lowered its tyre sales outlook on Wednesday to 14-15 billion euros from 14.5-15.5 billion previously, but kept its margin outlook unchanged as higher pricing and a focus on premium products boosted second quarter revenue.

It needed to “make up considerable ground” in its automotive segment, which fell short of expectations in the second quarter partly because of currency exchange effects and freight costs.

The company confirmed its lower than expected adjusted earnings margin 4.8% on sales of 10.4 billion euros, as reported in preliminary results in July.

The automotive division’s loss on its earnings margin of 0.6% was below the consensus of a 1% rise, despite meeting expectations for sales at 5.1 billion euros.

Continental said it expects passenger car and light commercial vehicle production to rise 3-5% this year from a previous forecast of a 2-4% rise, but expects the global tyre replacement business to remain unchanged or decline by up to 2%.

Preliminary figures showed Continental’s global passenger car and light commercial vehicle production grew by around 16% in the second quarter compared to last year.

($1 = 0.9101 euros)

(Reporting by Victoria Waldersee, Editing by Friederike Heine, Barbara Lewis and Alexander Smith)

By Samrhitha A

(Reuters) -Online gaming platform Roblox missed estimates for second-quarter bookings on Wednesday as waning demand for its online games and intensifying competition hurt growth, sending its shares down nearly 20%.

Shares of the company were set for their worst day in 10 months and on track to erase nearly all its gains this year, if losses hold through the session.

The videogame industry is struggling with a slowdown in spending as inflation-weary gamers become more selective in picking popular titles.

“We plan to slow our headcount growth rate and expect to generate operating leverage beginning in fiscal year 2024 and generally through the end of fiscal year 2025,” the company said in a regulatory filing.

Roblox, which operates a metaverse – an emerging virtual space where people play games and make transactions – reported 65.5 million daily active users in the quarter, with a long-term goal of reaching 1 billion daily users.

The company, popular for games such as “Adopt Me!” and “Brookhaven”, posted net bookings of $780.7 million in the quarter, missing analysts’ average estimate of $784.9 million, according to Refinitiv data.

Roblox reported a loss of 46 cents per share, slightly more than a loss of 45 cents per share estimated by analysts.

The company’s results come on the heels of downbeat forecasts from Electronic Arts and “Grand Theft Auto” publisher Take-Two.

One of the more popular gaming sites for teens and tweens, it expects to make revenue this year from its advertising initiatives, which include advertisers like Spotify and H&M.

“We’ve now done over 200 brand activations on the platform. And we’ll make revenue this year in advertising,” CEO David Baszucki said in a post-earnings call.

Roblox has also jumped on the AI bandwagon, with a robust pipeline of AI innovations for the next several years.

(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Pooja Desai)

TOKYO (Reuters) -Japan’s Honda Motor reported a 78% rise in quarterly profit on Wednesday, boosted by increased sales, especially in the North American market, and a weaker yen.

Japan’s second-biggest automaker by sales said its operating profit totalled 394.4 billion yen ($2.76 billion) in the three months through June, handily beating the average 324.74 billion yen estimate in a poll of 10 analysts by Refinitiv.

That compared with a 222.2 billion yen profit in the same period last year.

Like other automakers, Honda said it benefited from strong sales to retail customers in the key U.S. market, posting a 44.7% year-on-year jump to 347,000 units, as the impact of post-pandemic disruptions in the supply of parts and chips eases.

That contrasted sharply with a steep 5% drop in sales in China to 309,000 vehicles that Honda reported for the quarter, faced with growing local competition and a rapid shift to electric vehicles in the world’s biggest car market.

Business conditions in China had grown worse for Honda compared to when it issued its forecast of selling 1.4 million vehicles for the full year, a Honda official said.

“We’re still operating amid some restrictions from semiconductors,” the official said.

“If we were to revise our sales forecast in China, we’ll want to move ahead with considering whether we can distribute parts to and manufacture more in other regions.”

Honda maintained its forecast for a 1.0 trillion yen operating profit for the current year, lower than the 1.117 trillion yen average forecast from 22 analysts.

The company will weigh the need for an update to its full-year outlook including the benefits it sees from a weakening yen when it announces second-quarter results around the start of November, the official added.

($1 = 143.1200 yen)

(Reporting by Daniel Leussink; Editing by David Dolan, Chang-Ran Kim and David Evans)

By Joanna Plucinska, Rajesh Kumar Singh, Doyinsola Oladipo and Priyamvada C

LONDON/CHICAGO/NEW YORK (Reuters) -The post-pandemic travel boom and the high ticket prices that come with it show no signs of slowing well into next year, despite economic uncertainty and dwindling household savings.

While questions linger about how much longer consumers will continue to indulge, airlines, hotels and analysts say travel has remained a top priority instead of the “nice to have” purchase as in years past.

International travel reached around 90% of pre-pandemic levels this year, according to the International Air Transport Association. The rebound was led by visitors to Southern Europe from cooler climates despite soaring temperatures and included swaths of American tourists flying overseas.

TUI, one of the world’s biggest holiday firms, on Wednesday reported its first post-pandemic net profit on the back of robust bookings and travel demand in the three months to the end of June.

“In the wake of the pandemic, a number of folks have reset their priorities and have focused on splurging on travel,” said Dan McKone, a senior partner at strategy consultancy L.E.K. Consulting.  

That desire may even strengthen next year, according to travel tech firm Amadeus, whose recent survey showed that 47% of respondents said international travel was a high-priority discretionary spending category for 2023 and 2024, compared with 42% who ranked it as such the previous year. Amadeus sampled travelers from Britain, France, the United States, Germany and Singapore.

Those trends lifted quarterly earnings of travel companies, with cruise operators like Royal Caribbean reporting record results in recent weeks. Travel operators Booking Holdings and Airbnb said revenue was up 27% and 18%, respectively, and air carrier Delta and hotel giant Marriott International forecast strong future demand.

German carrier Lufthansa said bookings for the rest of the year currently exceed 90% of the pre-pandemic level and the summer season extending into October. United Airlines is expanding Pacific coverage this autumn with new flights to Manila, Hong Kong, Taipei and Tokyo.

Overall, global passenger demand is estimated to grow 22% year-on-year in 2023 and 6% in 2024, Moody’s investor service said on Tuesday. Ticket prices, which in some cases have increased by double-digit percentages since the pandemic, are unlikely to plummet.

“Everyone is pricing against demand and this is the basic economic equation,” Jozsef Varadi, CEO of budget carrier Wizz Air, told Reuters. “We are in a high-input cost environment. So, that puts pressure on pricing.”

Travelers to Europe and Asia are not expected to see substantial price relief this autumn, said Hayley Berg, lead economist at online travel agency Hopper.

She expects air fares on long-haul international routes to remain high until supply outpaces pre-pandemic levels, demand normalizes and jet fuel prices decline further.

The weak spot is U.S. domestic travel, as the end of COVID-19 testing restrictions has unleashed pent-up demand by Americans to take vacations overseas.

“They said earlier in the year, ‘Look, I’m going to do that international trip that we’ve been meaning to do,’ and that’s created a lot of crowded places with Americans in Europe,” Booking Holdings CEO Glenn Fogel told Reuters.

International inbound travel to the United States in May rose 26% year over year to 5.37 million visitors but is still about 20% lower than pre-pandemic visitor volumes reported in May 2019, according to the U.S. National Travel and Tourism Office.

Average domestic airfare is currently $246 round-trip, down 8% from 2022, according to travel booking app Hopper.

Executives said U.S. hotel rooms may become more expensive due to lack of supply, but softening demand may moderate that effect.

“Growth is expected to remain higher internationally than in the U.S. and Canada, where we’re seeing a return to more normal seasonal patterns,” said Marriott CFO Kathleen Oberg.

Looking ahead, some airline groups like British Airways owner IAG said it is unclear whether demand can be sustained. Analysts have said dwindling consumer savings could cause a downturn in spending if inflation fails to let up.

(Reporting by Joanna Plucinska in London, Rajesh Kumar Singh in Chicago, Doyinsola Oladipo in New York and Priyamvada C in BengaluruEditing by David Gaffen and Matthew Lewis)

MEXICO CITY (Reuters) -Mexico saw its annual inflation rate slow for the sixth consecutive month in July to 4.79%, data from statistics agency INEGI showed on Wednesday, continuing a downward trend spurred by a long cycle of interest rate hikes.

Headline inflation was in line with a market forecast of 4.79%, a more than a two-year low after rising to a record 8.7% last year.

The deceleration in recent months has largely been propelled by a decline in energy and food prices, Goldman Sachs analyst Alberto Ramos said.

Consumer prices rose 0.48% in July from June, according to non-seasonally adjusted figures, just under the expected rise of 0.49%.

The closely watched core price index, which strips out some volatile food and energy prices, rose 0.39% during the month.

Annual core inflation in July, considered a better gauge of price trends because it excludes some highly volatile items, was 6.64%, below the estimated 6.68% and the lowest level since February 2022.

Underlying inflation pressures have been easing up with “solid performance of the Mexican peso over the last few quarters, falling inflation expectations and low input costs,” said Pantheon Macroeconomics in a note, which would allow policymakers to cut rates from the fourth quarter onward.

However, with services inflation remaining “sticky” by holding steady from June at 5.2% year-over-year – reflecting the strength of the labor market and wage growth – inflation could remain above target until late 2024, analysts at Capital Economics cautioned.

Mexico’s central bank has held its interest rate steady at a historic high of 11.25% and said it expects to keep it there for an “extended period.”

The bank, which has an inflation target of 3% plus or minus 1 percentage point, is set to announce its next interest rate decision on Thursday.

(Reporting by Natalia Siniawski; Editing by Paul Simao, Christina Fincher and Jonathan Oatis)