Once again, Conti can relax in the DAX…
Almost four years after being shown the door at the DAX 30, Germany’s Continental AG is set to re-enter the exclusive group of the 30 major German companies trading on the Frankfurt Stock Exchange. Stock exchange operator Deutsche Börse announced Conti’s return to the DAX 30 on the evening of 5 September.
“Continental is back. We are delighted at our return to the category of the most valuable companies on Deutsche Börse,” stated Continental Executive Board chairman Dr. Elmar Degenhart. “This step confirms the successful hard work of the more than 170,000 Continental employees worldwide in recent years. For us, the return to the DAX is both recognition and an incentive. Over the past years, we have been able to justify the confidence of customers, investors and banks and have significantly increased our market value. We thus feel strengthened to continue on the successful path we have taken.”
Commenting on the decision, Degenhart pointed out that since the end of 2008 Continental’s market capitalisation has risen from 4.6 billion euros to more than 16.8 billion euros, and added: “This means that in terms of market capitalisation, Continental is valued more highly than ever before in its history of almost 141 years. We consider this to be proof that the company has been right to gear its business towards the megatrends in the automotive industry with an additional focus on tyre business and ContiTech.”
Continental is the first company to succeed in making two comebacks into this top German exchange category. In 2003, after 15 years in the ‘wilderness’, the DAX founding member staged its first return. It remained there until 31 December 2008, when it was moved to the MDAX. Continental notes that the volume of freely tradable company shares at the time – just over ten per cent – dipped below the necessary criteria required for DAX membership in regards to market capitalisation and trading volume.
Now the company’s stock market value is close to 16 billion euros, of which roughly 40 per cent is relevant to index selection as free float according to Deutsche Börse’s criteria. Over the past twelve months, the trading volume relevant to index selection amounted to over 9 billion euros on average. Thus the criteria for DAX membership has clearly been met.
“In the past successful three years we have continued our extensive and transparent financial market communication at a high level, particularly because of our changes in the ownership structure and our strategic realignment,” reported Continental CFO Wolfgang Schäfer. “We are therefore excellently prepared for the challenges ahead. We are currently monitored by more than 40 equity and bond analysts. Despite the positive share price development, the majority of the equity analysts still recommend buying our share.
“The average target price calculated by the equity analysts for our share is 90 euros, and at the high end it is as much as 125 euros. The quotations for our bonds have also developed positively, with the yields on Continental bonds falling significantly. This all shows that the investors recognise that our business is not just temporarily “running smoothly” and “taking off”. They are demonstrating confidence in our sustainable financial strength.”
Continental presented its half-year figures on 2 August and at the same time raised its full-year 2012 outlook: The company aims to generate sales of more than 32.5 billion euros and intends to beat its previous year 10.1 per cent adjusted EBIT level.
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