German tire maker Continental says it is in the final stage of its strategic realignment and remains on track to meet full-year expectations in its tires business, despite warning of a substantial increase in raw-material costs in the second half of the year.

The company reported a second-quarter net profit of 274 million euros ($315.4 million), down from 506 million euros a year earlier, while sales fell 9.1% to 4.41 billion euros. It expects to report sales in its tires unit this year of 13.2 billion to 14.2 billion euros and an adjusted earnings before interest and taxes margin of 13.0% to 14.5%.

Last month it agreed to sell its Conti Tech unit to private-equity firm Lone Star Funds in a deal that values the business at around $4.6 billion and includes potential additional payments of up to $286 million. As a result, Conti Tech will be reported as a discontinued operation going forward and is no longer included in the consolidated outlook.