Record year in sights after good H1, says Conti
On the back of its second quarter results, which nearly matched those attained in the first quarter, Continental sees itself “on track for another record year.” Commenting on the German tyre and automotive supplier’s performance to 30 June, Executive Board chairman Dr. Elmar Degenhart stated “based on the successful first half of the year, we are confident that we will comfortably achieve the goals we have set for the year. Nonetheless, we must continue to keep a close eye on the uncertainties on the global sales markets, the difficult economic situation in some European Union member states and the slowdown in global economic growth.
“As a result of the good development in the first half of the year, we now anticipate an increase in consolidated sales of more than seven per cent to over 32.5 billion euros. In addition, we assume that the adjusted EBIT margin will even top the very good level achieved in 2011. The reason for this reassessment is the slightly lower negative impact from raw material costs, which had recently increased heavily,” Degenhart explained. “Despite record investments of some 2 billion euros, the goal for the free cash flow remains unchanged at more than 600 million. euros”
In the first six months of 2012, the company increased its sales 10.9 per cent year-on-year to 16.5 billion euros. At the same time, EBIT rose almost 26 per cent to 1.6 billion euros, with an EBIT margin of 9.7 per cent, against 8.6 per cent a year ago. Continental’s adjusted EBIT, adjusted particularly for acquisition-related amortisation and special effects, rose to more than 1.8 billion euros, up from just under 1.5 billion euros a year earlier. The adjusted EBIT margin is 11.1 per cent, compared with 10.0 per cent a year ago. First half net income attributable to the shareholders of the parent rose nearly 47 per cent year-on-year to 1 billion euros, corresponding to earnings per share of 5.02 euros; earnings per share were 3.42 a year ago.
The company’s net indebtedness decreased year-on-year by 238 million euros and was slightly higher than at the end of 2011, rising by just under 104 million euros. “Compared with June 30, 2011, we improved our equity by almost 1.5 billion euros to a good 8.3 billion euros and upped the equity ratio to more than 30 per cent once again. This was not the least reason that our gearing ratio improved to nearly 83 per cent despite the slight increase in net indebtedness as a result of seasonal factors. The ratio was still 104 per cent a year ago and 85 per cent at the end of the first quarter,” explained Continental CFO Wolfgang Schäfer. “We also improved our free cash flow by nearly 90 million euros to 126 million euros in the first half of the year compared to the first six months of 2011.”
Almost 830 million euros were earmarked for investments in the first half of the year, 210 million euros more than in the same period last year. “We are thus fulfilling our promise to reduce our indebtedness while at the same time paying dividends once again and investing substantially in our profitable growth,” Schäfer stressed. The capital expenditure ratio rose accordingly from 4.2 per cent to 5.0 per cent. In the Rubber Group, it reached 6.7 per cent due in part to the announced additional expenditures for Tire Division capacity expansion.
Continental’s Rubber Group recorded sales of just over 6.5 billion euros – an amount the company points out as being another new half-year record. “The adjusted EBIT margin of 16.5 per cent benefited from the recent fall in raw material costs,” Degenhart stated. “But in view of the fact that price increases must be anticipated again in the future, this level cannot be the benchmark in the long term.” The Automotive Group’s half-year sales broke the 10 billion euro barrier for the first time, up from 9 billion euros a year earlier. “At the same time, we slightly improved our adjusted EBIT margin, which amounted to 8.1 per cent after 8.0 per cent a year ago,” the Executive Board chairman added.