Continental Results Show 21.4 per cent Growth
Continental AG have released results which show substantially growth for the second consecutive quarter.
The international automotive supplier increased its first-half consolidated sales 9.0 percent from 5,646.8 million euros (£3724.18) to 6,157.4 million euros (£4060.93), including the costs of exchange rates and consolidation charges.
“We have once again demonstrated our powerful ability to grow in a phase when the global automotive economy continues to be rather sluggish,” according to the chairman of the Continental Executive Board, Manfred Wennemer.
In spite of restructuring costs, the results of US passenger tyre operations increased significantly to 484.4 million euros, up 21.4 percent from last year’s figure of 399.1 million euros. The return on sales amounts to 7.9 per cent. Without restructuring costs for the Mayfield tyre plant (98.9 million euros), the earnings improved by 46.2 per cent.
“Not only were our future-oriented restructuring measures in the USA offset, but last year’s figures were even outperformed quite impressively. This is an enormous achievement on the part of all divisions,” emphasized Dr. Alan Hippe, Executive Board member responsible for finance. Consolidated net income after taxes went up from 195.4 million euros to 221.4 million euros, with earnings per share rising from 1.50 to 1.63 euros. Net debt was 908.8 million euros down on the first six months of 2003. The gearing ratio was down from 113.0 percent to 52.6 percent.
The number of employees working for Continental also rose, growing to 76,803, an increase of 3,987, compared with 31 December 2003. Reasons for the increase include the first-time consolidation of the sensor business in China for Continental Automotive Systems, as well as the rise in the number of employees of the Commercial Vehicle Tires division due to the consolidation of Continental Sime Tyre in Malaysia.
Before foreign exchange effects, the Continental Automotive Systems division increased its sales in the first six months of 2004 by 11.8 per cent over the first half of 2003. Including exchange rate effects, sales were up 9.0 per cent from 2,357.1 million euros to 2,569.5 million euros.
Significant volume gains were recorded, especially by the Electronic Brake and Safety Systems, Brake Actuation, Comfort Electronics, and Powertrain & Chassis units. In North America and Europe, mid-2003 sales volume levels were outperformed. The division increased its operating result (EBIT) to 244.6 million euros, up 31.4 per cent from 186.1 million euros halfway through 2003. The return on sales amounted to 9.5 per cent.
Sales of the Passenger and Light Truck Tires division were up 8.3 per cent for the first half of this year. Including exchange rate effects, sales were up 5.3 per cent from 1,825.2 million euros to 1,921.8 million. Volumes sold to the automobile industry rose by 14 per cent. In the replacement business, sales figures were up 9 per cent for Europe but declined for the NAFTA region. There was a 98.9 million euro charge against earnings due to the restructuring programs at our Mayfield plant. This restructuring expense will amount to about 120 million euros for the year as a whole.
Despite the restructuring costs, the operating result (EBIT) of the Passenger and Light Truck Tires division, at 120.7 million euros, is 1.4 million higher than the previous year’s half-year result. The return on sales amounts to 6.3 per cent, compared with 6.5 per cent a year ago. Before restructuring costs, EBIT was up 84.1 per cent to 219.6 million euros with a return on sales of 11.4 per cent.
The half-year sales of the Commercial Vehicle Tires division rose by 10.0 per cent before foreign exchange effects and changes in the scope of consolidation. Including exchange rate effects and the consolidation of Continental Sime Tyre, sales went up 23.1 percent from 579.9 euros million to 714.0 million. Total volume sold to the vehicle manufacturers and to the replacement market increased by 10 per cent in Europe. A two per cent gain was recorded for sales volumes in the NAFTA region where deliveries to the automotive industry were notably higher, while sales to the replacement market declined.
The higher cost of materials and additional social welfare expense in the USA continued to have an adverse effect on earnings. Nevertheless, the operating result (EBIT) of the division rose from 33.4 million euros to 43.3 million euros, representing a 29.6 per cent increase. The return on sales increased from 5.8 per cent to 6.1 per cent.
The ContiTech division increased its sales in the first six months of 2004 by 7.9 per cent over the first half of 2003 before foreign exchange effects. Including exchange rate effects, sales were up 7.7 percent from 916.1 million euros to 986.9 million euros. All business units reported gains over the first half of 2003, with Benecke-Kaliko and Elastomer Coatings just slightly outperforming the previous year and the other units posting significant improvements. ContiTech increased its operating result (EBIT) to 95.7 million euros, up 19.6 per cent from 80.0 million euros for the first six months of last year. The return on sales thus amounts to 9.7 per cent, compared with 8.7 per cent a year ago.
“We anticipate that consolidated sales will increase for 2004 as a whole. Moreover, there are indications that we will outperform our previous year’s operating result – despite the charge due to the restructuring at our Mayfield tyre plant in the US,” said Wennemer, commenting on the outlook for the current business year.