Continental Expects Tyres Sales to Help Profitability

Continental expects its profitability will be assisted by improvements at its truck tyre business and demand for electronic car parts. , Furthermore, the automotive part supplier, the third-best performer on Germany’s DAX share index this year, expects to improve earnings and is said to be considering its options in emerging markets like India and China.

Continental will increase earnings before interest and tax as a percentage of sales to 11 per cent from 10 per cent last year, chief executive Manfred Wennemer told Bloomberg at the Frankfurt motor show, without providing a time frame. He reiterated that full-year profit and sales will increase from last year.

At the truck tyre division, Wennemer expects earnings before interest and tax as a percentage of sales to rise in the coming years to the company’s target of 8 per cent from about 6 per cent.

Improvements at the US tyre business, where losses are as much as $55 million annually, will boost earnings, Wennemer told Bloomberg.com. The company is also reportedly considering reducing production of tyres in the US again after ceasing production at its Mayfield plant last year.

The German company’s tyre division is also reported to be considering possible acquisitions in China and India. The decision as to whether Continental will expand alone or with a partner in China is expected to be made in the next year. The company is “late” in entering the Chinese tyre market, Wennemer said.