Conti’s nine-month sales hit by currency effects

Continental’s nine-month figures would have been 5.7 higher than for the same period last year, but currency exchange effects mean that they were virtually identical at 8.485 billion Euro. The consolidated operating result, or EBITA (earnings before interest, tax and regular goodwill amortization) for the nine months was up 20.7 per cent to 661 million Euro (2002: 547 million). The return on sales was 7.8 per cent (2002: 6.5 per cent).

Dr. Alan Hippe, Executive Board Member for Finance, Controlling and Law, was pleased with the results, particularly the fact that Continental lowered its net indebtedness by 789 million Euro, compared with the first nine months of last year. The following give brief highlights of the results from each of
Continental’s divisions:

Continental Automotive Systems: Nine month sales were up 1.4 per cent to 3.47 billion Euro (9m 2002: 3.42 bn) but, without exchange rate effects, this increase would have been 7.8 per cent. Sales volumes in the USA were weaker than last year, while Europe outperformed its previous year’s performance. Operating result (EBITA) was up too; to 279 million Euro (9m 2002: 224 million) and the return on sales was 8.0 per cent (6.5 per cent).

Passenger Tires: Excluding exchange effects, sales would have been 7.3 per cent higher, but when currency factors are taken into account, sales were up 2.1 per cent to 2.821 billion Euro. In unit terms, sales rose by six million tyres (9 per cent) and the division’s operating result (EBITA) was up 50.8 per cent to 239 million Euro, with a return on sales of 8.5 per cent (5.7 per cent). Losses were made in the NAFTA region, but were more than compensated for by results in Europe, notably in the winter tyre sector, where sales increased by 13 per cent over 9m 2002.

Commercial Vehicle Tires: Not such good news, with sales declining 8.7 per cent to 894 million Euro (9m 2002: 979 million). Factoring out currency adjustments would have seen a 1.8 per cent growth in sales. In unit terms, sales rose three per cent in Europe and one per cent in NAFTA, but these were offset by high raw material costs and, in the USA, additional social and welfare costs. Operating result (EBITA) was 57 million Euro (9m 2002: 82 million) and the return on sales declined from 8.4 per cent to 6.4 per cent.

ContiTech: Sales rose by 1.6 per cent to 1.354 billion Euro (9m 2002: 1.322 bn), but without exchange rate effects the rise would have been 2.8 per cent. The operating result was 112 million Euro (9m 2002: 108 million), with a 8.3 per cent return on sales (8.1 per cent).

Looking ahead, Continental says that it expects declines in automobile production in Europe and the USA, but as only 60 per cent of the group’s activities are linked directly to vehicle manufacturers, the effect of these declines on Continental will be small. Chairman of the Executive Board Manfred Wennemer was extremely bullish, saying: “Owing to the gratifying gains in volume, we are raising our earnings forecast – we now anticipate an operating result (EBITA) for 2003 of more than 750 million Euro.” The EBITA for 2002 was 694 million Euro.