Continental to tackle double-digit US losses
Deutsche Bank (DB) met with Continental management at Geneva to discuss the North American situation. Continental highlighted to DB that like Cooper and Michelin they had high confidence that price increases in the NA market would stick, as increases in raw materials prices had to be passed on to end users. Continental also told BD that the company is strongly committed to tackle double-digit OP losses in the US passenger car tyre division.
The company though believes that breaking even in the US in 2006 will remain challenging, as it is not simply a cost reduction issue. Continental also indicated the high growth in the Automotive System sector (electronics and ESP), which should enable the company to maintain a current high 8 per cent OP margin. DB felt that this showed Continental as a great company focused on cost reduction; “however, we believe much of this good news is already in the share price, which doubled last year.