Continental raises 2012 targets after strong first half performance

Continental raises 2012 targets after strong first half performance

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Having enjoyed a robust first half of 2012, Continental Corporation has revised its annual sales targets of the year upwards anticipating the strong momentum to carry on through the rest of the year. In the second quarter, the company’s sales almost matched that of its strong first quarter, and indications are that a record year is in store.

“Based on the successful first half of the year, we are confident that we will comfortably achieve the goals we have set for the year. Nonetheless, we must continue to keep a close eye on the uncertainties on the global sales markets, the difficult economic situation in some European Union member states and the slowdown in global economic growth,” said Continental Executive Board Chairman Dr. Elmar Degenhart last Thursday in Hanover.

“As a result of the good development in the first half of the year, we now anticipate an increase in consolidated sales of more than 7% to over €32.5 billion. In addition, we assume that the adjusted EBIT (earnings before interest & tax) margin will even top the very good level achieved in 2011. The reason for this reassessment is the slightly lower negative impact from raw material costs, which had recently increased heavily,” Degenhart explained.

The company enjoyed a 10.9% year-on-year increase to notch €16.5 billion worth of sales from January to June 2012. From there, EBIT was at €1.6 billion, a 9.7% margin compared to 8.6% of the corresponding period last year. After adjusting for acquisition-related amortization and special effects, EBIT actually rose to €1.8 billion, an 11.1% margin. For the share holders, net income rose 47% year-on-year to €1 billion, which translates to earnings per share of €5.02 after €3.42 one year ago.

Despite increasing dividend payout by €300 million and investments by almost €830 million, Continental was nevertheless able to bank on a stronger cash flow this year to reduce its net debt (i.e. total debt vs available cash and assets) by €238 million. The company’s equity stands at €8.3 billion, and free cash flow is at €126 million.

Worldwide, Continental currently employs 169,000 people in its pay roll, with 49,300 of them based in Germany as of June 2012. Since last year, the company added 9,700 people to its headcount, with more than 5,000 employed this year alone.

Among the business groups, the Automotive Group posted half-year sales exceeding €10 billion, having racked €9 billion in the corresponding period last year. In the aforementioned period, EBIT margin has also improved year-on-year from 8.0% to 8.1%. The Rubber Group, meanwhile, contributed €6.5 billion worth of sales, another new half-year record.

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