Continental’s Earnings Growth Slows

For the second quarter in a row Continental AG, has not shown any earnings growth. Deutsche Bank analysts have observed that even if EBIT was 5 per cent above consensus in the fourth quarter, pre-tax earnings were down 1 per cent year on year. According to the market analysts this is because the group lost market share in winter tyres, and margin recovery at Motorola is slower than expected.

“We expect a restated full-year EBIT increase of only 5 per cent (fully diluted EPS of Euro 6.8). We do not believe that an Auto Part Co (65 per cent sales to OEMs) can durably maintain a 12 per cent EBIT margin. Thus future growth/ share price performance will rely on a dynamic acquisition policy, which is by nature risky even if the group has a very good track record,” Deutsche Bank commented.

Continental’s management has recently officially shown interest in both Goodyear Engineering products and Siemens VDO.