Continental Aims For Record Targets
Releasing its first quarter 2005 results, Continental’s management reaffirmed the company’s desire to achieve ambitious targets. During the first quarter, consolidated sales rose by 8.9 per cent to 3,253.1 million euros, with newly acquired Phoenix contributing 237.7 million euros.
At the same time EBIT increased by 9.5 per cent to 281.7 million euros, according to the company. Phoenix is reported to have generated an operating result of 11.3 million euros. Consolidated earnings climbed to 167 million euros, representing a 24.8 per cent increase. Earnings per share rose to 1.15 euros.
“Despite the rather weak economy in the automotive industry, we still have our sights firmly set on record targets for the year as a whole. Our goal continues to be the achievement of new top sales and earnings figures in 2005 for the fourth time in a row, and we are well on our way there,” said executive board chairman Manfred Wennemer.
Capital expenditure also went up in the first quarter. “For the period to 31 March, we spent 142.2 million euros on research and development or 4.4 per cent of sales after 4.1 per cent one year ago. We also invested 158.4 million euros in property, plant and equipment, and software. After three months, the capital expenditure ratio is up from 3.7 per cent to 4.9 per cent,” said the executive board chairman.
The Passenger and Light Truck division increased sales for the first three months of 2005 by 6.7 per cent in comparison the same period the previous year. Sales rose by 3.3 per cent. This figure is said to have been affected by the assignment of the Malaysian subsidiary Continental Sime Tyre to its respective product groups (Passenger and Light Truck and Commercial Vehicle tyres). Previously this unit was wholly included in the Commercial Vehicle division. EBIT increased by 7.4 per cent to 91.1 million euros with a return on sales of 9.3 per cent.
The Commercial Vehicle division reported a 9.6 per cent drop in sales during the first quarter. According to Continental this is primarily due to the Continental Sime Tyre changes. Sales were up by 6.7 per cent compared with the same period in the previous year, while EBIT increased 12.9 per cent to 17.5 million.
The ContiTech division’s sales are reported to have increased 43 per cent to 707.9 million euros in the first quarter. Phoenix contributed 237.7 million euros in sales. Before sales fell by 2.7 per cent. The division increased its operating result by 19.5 per cent to 58.3 million, with the return on sales falling to 8.2 per cent. Phoenix contributed 11.3 million to the increase in operating result.
Dr Alan Hippe, executive board member responsible for finance, also pointed out that the corporation had converted its reporting to the International Financial Reporting Standards (IFRS). “There are not however any significant effects from this changeover,” he added.
Before the company officially released its results a survey of analysts estimates compiled by Bloomberg predicted a 27 per cent increase in net income, with this figure rising to 164.5 million euros. The survey also predicted that sales would rise 11 per cent to 3.31 billion euros.