Continental maintains 2012 annual targets despite tough market

Continental maintains 2012 annual targets despite tough market

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Despite unfavourable outlooks for the global economy, global automotive supplier Continental maintains its bullish business forecast of 2012, having already chalked a 9.1% year-on-year increase to €24.6 billion in its sales for the first nine months of the year.

“Based on the first nine months, we still expect consolidated sales to increase by more than 7% to more than €32.5 billion for fiscal 2012. We also target to achieve an EBIT margin above last year’s very strong level, as previously announced,” said Dr. Elmar Degenhart, Chairman of the Executive Board of Continental, on Wednesday at the publication of the quarterly figures in Hanover.

Continental’s EBIT, or pre-tax earnings, rose by €437 million or 22.8% year-on-year to €2.4 billion for the period from January to September 2012. This amounts to an earning margin of 9.6%, as opposed to 8.5% for 2011.

“After the positive overall development in the first three quarters, the start to the fourth quarter of 2012 has not given us any additional major cause for concern. Our current information indicates that consolidated sales from October to December are likely to be at least as high as in the third quarter of this year”, stated Degenhart.

“However, it is clear that the road is becoming rockier and we must keep our eye on the development of the markets. We are currently benefiting considerably from our international positioning and compensating for the declines in southern Europe in particular with growth in North America and Asia,” he added.

Adjusted EBIT for the corporation increased by €434 million or 19.5% year-on-year to almost €2.7 billion in the first nine months of this year, equivalent to 10.9% of adjusted sales after 9.9% in the same period of the previous year. As a result, shareholders can look forward to an increase in income by a whopping 62.5%, with each share set to earn €7.26 after €4.47 per share in the previous year.

Net indebtedness, the ratio of debt versus assets, of the first three quarters was reduced by almost €500 million year-on-year as compared to the same period of the previous year to €6.8 billion. Wolfgang Schäfer, Continental’s Chief Financial Officer, explained that the company aims to further reduce net indebtedness to less than €6.5 billion by the end of the year.

Meanwhile, for investments, Schäfer noted that, “Our investments are currently focused clearly on the Rubber Group: In the first nine months of this year, we invested €641 million in the Tire and ContiTech divisions in order to further reduce our dependence on the highly seasonal automotive industry while also continuing to expand our position in the tire markets, particularly in the BRIC countries.”

In total, Continental invested €1.3 billion in the first three quarters of 2012, approximately €240 million more than the corresponding period of 2011. Schäfer further indicated that the investment volume for the year as a whole would amount to approximately €2 billion.

There is also an increase in headcount to report. Some 6,121 new jobs were created in the first nine months of the year, bringing the Continental Corporation’s total headcount worldwide to 169,909 employees. This increase was primarily due to growth in sales volumes in the Automotive Group and expansion of capacity in the Tyre division.

Sales in the Automotive Group improved to €14.8 billion after nine months, with an adjusted margin of 7.7% after 8.0% in the previous year. Degenhart comments that despite the stable result, particularly for the Powertrain division, the company is not expecting an easy ride ahead in the coming months.

The Rubber Group generated sales of €9.9 billion. The positive development of raw material costs had a favorable influence on the adjusted margin (16.3%). Degenhart is confident that, despite experiencing weak demand for winter tyres at the start of the season, the company remains confident of repeatig last year’s sale of 20 million winter tyres, backed by positive test reports.



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