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Continental AG CEO says Audi recall no threat to guidance

[October 31, 2014] MUNICH (Reuters) - Continental said a fault with airbags installed at premium sportscar maker Audi could cost a double-digit million euro amount to fix, a sum which the German automotive supplier could absorb without revising its earnings guidance.

Earlier this month Audi said it was recalling 850,000 cars worldwide, because potentially faulty software may prevent airbags on its A4 model from deploying.

"We are the supplier of the system", Continental's Chief Executive Elmar Degenhart told journalists in Munich on Thursday evening, in remarks which were embargoed for Friday.

It remains unclear whether Audi or Continental was to blame for the fault, and both companies are still looking for what caused the problem to arise in the first place, Degenhart said.

"We have not analyzed this yet," Degenhart said.

Degenhart declined to give a specific figure for how much the recall could cost Continental, should the supplier be held responsible for causing the problem.

"It can be between zero and a double-digit million amount," Degenhart said, adding it was common practise at suppliers and car companies to set aside provisions to pay for potential recalls.

"Even if we were found to be fully responsible we would not have to change our earnings guidance," Degenhart said.

In July, Continental AG raised its full-year profit margin forecast for the second time in five months.

Audi said its faulty airbags are not made by Japan's Takata Corp <7312.T>, which is at the center of a burgeoning number of recalls over air bags that could spray shrapnel at occupants.

(Reporting by Irene Preisinger; Writing by Edward Taylor; Editing by Maria Sheahan)


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