Continental: Tyre division growth behind group average in Q1-3 2017
The word Continental has used to describe its sales growth in the nine months to 30 September 2017 is “strong”. Sales rose 9.0 per cent during the period to 32.7 billion euros, a result Executive Board chairman Dr Elmar Degenhart attributes to putting “money on the right horses with our technologies for safe, efficient and intelligent mobility.”
Backing the “right horses” in the intelligent mobility sector helped the Rubber Group’s ContiTech business lift its sales 14.2 per cent year-on-year in the year to 30 September, however this double-digit growth was counterbalanced by Tire business sales growth of just 6.0 per cent, to 8.4 million euros. Overall, Rubber Group sales increased 9.0 per cent year-on-year to 13.0 billion euros.
Adjusted EBIT rose 13.0 per cent year-on-year over the nine months to September 2017, with a margin of 10.6 per cent. “We are therefore completely on track and will comfortably achieve our annual targets,” said Elmar Degenhart. He could have added that this result wouldn’t have been possible without the 59.8 per cent year-on-year jump in adjusted EBIT within the Automotive Group, including a 104.1 per cent increase in the Chassis & Safety division. Rubber Group adjusted EBIT was down 9.8 per cent on a year earlier. The EBIT margin expanded by 0.5 per cent.
Continental’s sales during the third quarter of the year amounted to 10.7 billion euros, year-on-year growth of 7.1 per cent. Third quarter 2017 Rubber Group sales, at 4.4 billion euros, were up 8.0 per cent on the corresponding period in 2016. Sales within Continental’s Automotive Group also rose 9.0 per cent year-on-year, to 19.8 billion euros, in the first three quarters of the year. Third quarter 2017 sales amounted to 6.3 billion euros, a year-on-year increase of 6.5 per cent.
“The Rubber Group increased its sales further in the third quarter despite a weak market environment,” stated Wolfgang Schäfer, chief financial officer at Continental. “That is remarkable. The price increases for tyres and industrial products from the first half of the year have generated their positive effect. At the same time, the earnings in the third quarter were burdened by more than 100 million euros. Schäfer added that the winter tyre business for the 2017/18 season is “off to a good start.”
For the third quarter, adjusted EBIT increased 69.3 per cent year-on-year to 1.1 billion euros. The margin went up from 6.4 per cent to 10.4 per cent, a result described as “very decent” by Wolfgang Schäfer. “We achieved this despite the negative effects that have already impacted us this year from rising raw material costs,” he added.
Full-year sales of 44 billion
Continental continues to estimate the negative effect of rising raw material prices for the Rubber Group in fiscal 2017 at 450 million. The recent development of raw material prices will not take effect until fiscal 2018.
In light of the Group’s sales and adjusted EBIT margin over the first nine months of the year, Elmar Degenhart views Continental as “completely on track” to “comfortably achieve our annual targets.” Schäfer reports that Continental expects full-year 2017 sales in excess of 44 billion euros, before exchange rate effects. “We can now make a good estimate of the influence that various currencies will have on our total sales for the year. Taking these exchange rate effects into account, we expect sales of around 44 billion euros.”
Further information on Continental’s fiscal results can be found in the Tyrepress.com company profiles and reports section.