Continental AG reports its new year has got off to “a very convincing start”, and adds that, contrary to stories appearing in the media, it sees no reason to reopen negotiations with Siemens over the VDO unit. Furthermore, the company holds a positive outlook for its 2008 targets. “We shall set forth our streak of success,” stressed CEO Manfred Wennemer on March 14. “In the first two months our sales and results far exceeded our forecasts and were well ahead of the previous year’s figures. We reaffirm our prognosis: Overall sales of more than 26.4 billion euros; a consolidated EBIT margin of 9.3 per cent before amortisation from the purchase price allocation and before integration and restructuring expenses. In addition we assign the very highest priority to cutting away at our debt. As planned, we shall apply our robust free cash flow to the reduction.”

Wennemer stated that Continental would work towards boosting the sizeable value-added potential opened up by the Siemens VDO acquisition. “We still look to synergy effects of more than 300 million euros as of 2010,” he said. “As previously announced, we shall, this year, tackle and wrap up the integrations projects. Above and beyond this we plan to undertake certain restructuring measures. This will affect the Powertrain division in particular, in which we have pinpointed considerable optimisation potential. In absolute terms the restructuring requirement is well within the framework established. As expected, integration and restructuring costs for 2008 and 2009 will, in their entirety, remain in the lower three-digit million range.”

The Conti CEO drew attention to the product range and future growth prospects of the Powertrain division, an operation that days earlier was criticised by Germany’s Hannoverschen Allgemeinen Zeitung newspaper for its lack of profitability. “The more the price of oil and fuel rises, the better the sales outlook is for ultra-efficient injection technologies, turbocharger or hybrid systems, to cite just one example,” he said.

Addressing the recent media reports, Wennemer underscored that there is no basis for the current speculation about an alleged reopening of negotiations on the Siemens VDO transaction. “In view of the facts and figures before us, we see absolutely no reasons at this time for such a move! The potential to be realised with the acquisition is enormous! As in the case of previous purchases, we shall prove that we completely master the fine art of value-creating integration.”