Continental Boosts Profits in 2006

Continental AG has announced that its 2006 sales and earning figures have, for the fifth time in a row, outperformed the previous year’s figures. The company’s Passenger and Light Truck Tires division increased its sales to 4,693.6 million euros (£3,156.5), up 5.6 per cent compared with 2005. Conti’s executive board chairman and person in charge of the division, Manfred Wennemer, said “In view of various negative impacts, particularly the 169 million euro increase in raw material costs, we have done a really good job, also in comparison with our competitors.” Sales volume was slightly higher than in 2005, with 106.3 million tyres sold.

The Commercial Vehicle Tires division achieved sales of 1,468.3 million euros (£987.5 million), up 6.5 per cent compared with the previous year. The division boosted worldwide truck tyre sales by 4.2 per cent to 6.9 million tyres. “We have prepared for further growth with additional capacity at low-cost locations in Slovakia, Brazil and Malaysia,” said Dr. Hans-Joachim Nikolin, Executive Board member responsible for the division.

Continental’s executive board intends proposing that the dividend be doubled to 2 euros per share. The proposal, which will be presented to the company’s annual shareholders’ meeting on April 24 is still, however, subject to approval by the supervisory board. The dividend paid, together with the 17.5 per cent increase in the share price for 2006, represents a total shareholder return of 18.8 per cent for the year as a whole.

Outlook 2007
Wennemer believes that “consolidated sales for fiscal 2007 will grow as a result of the full consolidation of the business operations acquired from Motorola,” with organic growth of at least 5 per cent also expected. “At the same time,” he added, “we anticipate a further improvement in our absolute consolidated operating result, with positive effects coming from the current easing of raw material prices, the latter still being, however, at a very high level.” Furthermore, Wennemer points out that the company will “initiate additional activities to achieve a more efficient balance sheet structure in 2007 as well. Such activities could include acquisitions, organic growth as well as a higher, shareholder-return orientated dividend in the future.”