Conti optimistic about meeting 2012 goals
A week ago, Continental gave word that its performance in the first quarter of this year was “very good”. The company has now released its full report for the quarter, providing additional details on the three-month period to 31 March.
Quarter one was, says Continental, a new record for the company in terms of sales and EBIT. In the first three months of 2012, the tyre maker and automotive supplier increased its sales 13.3 per cent year-on-year to more than 8.3 billion euros. At the same time, EBIT rose almost 21 per cent to 766 million euros, with an EBIT margin of 9.2 per cent, against 8.6 per cent a year ago. The corporation’s adjusted EBIT, adjusted particularly for acquisition-related amortisation and special effects, rose to 875 million euros, compared with 734 million euros last year. The adjusted EBIT margin is 10.6 per cent, up from 10.0 percent a year ago. Net income attributable to the shareholders of the parent rose a good 31 per cent year-on-year to approximately 483 million euros, corresponding to earnings per share of 2.41 euros.
Commenting on the quarter results on 4 May, Continental CEO Dr. Elmar Degenhart said “the excellent start to the new year makes us optimistic about meeting the goals we have set for ourselves for the year. We intend to increase our sales by more than five per cent to over 32 billion euros, realise an adjusted double-digit EBIT margin, and further reduce net indebtedness to under 6.5 billion euros.”
Net indebtedness was reduced by 764 million euros in comparison with the same quarter the previous year. Due to seasonal effects, however, indebtedness was 69 million euros higher than at the end of 2011. The rise was much lower than what is standard for a first quarter. The gearing ratio at the end of the first quarter of 2012 thus improved to 85 percent, as against 117 percent one year ago and 90 percent at the end of 2011.
“In the meantime, the consistent reduction in our indebtedness is also having a noticeable positive effect on our interest expenses, which, at 145 million euros, were down by about 38 million euros year-on-year,” remarked Continental’s CFO Wolfgang Schäfer. “In addition to the lower net indebtedness, the fact that the interest margins are down on a year-on-year basis contributed to this development. We are enjoying the payoff of having established a link between interest margins and the ratio of net indebtedness to EBITDA. The leverage ratio, which is also important for our rating, was a bit over 1.5 at the end of the first quarter. We want to be below this value at the end of the year.” Schäfer went on to point out that the company had liquidity reserves totalling nearly 3.7 billion euros at its disposal on March 31, 2012. These consisted of 1.3 billion euros in cash and cash equivalents, as well as 2.4 billion euros in unused credit lines.
During quarter one, 2012, Continental created around 3,400 new jobs and thus now has approximately 167,000 on its payroll – 12,400 more than one year ago. “If the positive production trend continues in the automobile industry, we will create thousands of jobs worldwide this year as well,” said Degenhart.
The CEO also stressed that once again both the Automotive Group and the Rubber Group contributed to the corporation’s growth. Year-on-year, first quarter sales in the Automotive Group were up approximately 12 per cent to just under 5.1 billion euros. Adjusted EBIT of 403 million euros was reported (359 million a year ago). The Rubber Group posted sales of nearly 3.3 billion euros, representing an increase of approximately 15 per cent. In the first quarter 2012, adjusted EBIT amounted to 494 million euros, topping 397 million euros for the same quarter a year ago. Quarterly earnings in the Automotive Group were weighed down by higher costs for rare earths, whereas the negative effects emanating from the recent spike in oil prices will only be felt in the Rubber Group as the current year progresses.