Analysts: Conti’s 1Q Results Suggest 100% Increase in Numbers

Analysts have reported that Continental’s first quarter financial results (released last week) show a “100 per cent increase in numbers.” This means that, in Morgan Stanley’s view, the company’s net debt is now “under control at 8.2 billion euros,” approximately 200 million better than they expected.

“Excluding the 1.1 billion capital increase during last quarter, the net financial position deteriorated by 413m in the first quarter 2010, which was largely expected due to seasonality of working capital,” the analysts explained in an investor’s note dated 4 May, adding: “[Capital expenditure was unsustainably low, however, decreasing by 62 million euros year-on-year and represented just 63% of depreciation and amortization and 3 per cent of sales.”

Looking specifically at the company’s rubber group, which is home to its passenger car tyre, truck tyre and Contitech (industrial conveyer belts and similar products), the analyst described the truck tyre wing as their “only disappointment.” Truck sales were in line with estimates, but the margin was lower – 2.2 per cent instead of the 3 per cent expected. Passenger car tyre sales, on the other hand, were 12 per cent above the Morgan Stanley estimate with a 17.3 per cent adjusted margin compared with the company’s 15 per cent estimate.

Related News:

• Reports: Continental Considering Tyre Unit IPO

• Continental AG to Hold Off on Stock Sale Before 2012

• We’re Back on the Road to Success, Conti Shareholders Told

• Continental Back in the Black in Q1