Continental raises EBIT margin forecast to 11%

Although Continental says the economic environment in the first quarter of 2016 was as “difficult as expected,” the company reports making a good start to the year. In the three months to 31 March, the tyre maker and automotive supplier’s sales rose three per cent year-on-year to €9.85 billion, even though negative exchange-rate effects had reduced this sales growth by 2.1 percentage points. Adjusted EBIT climbed to €1.1 billion. At 11.3 per cent, the adjusted EBIT margin was higher than the previous year’s level of 10.6 per cent.

“In light of the difficult market environment, we had a good start to the new fiscal year,” said Continental Executive Board chairman Dr Elmar Degenhart. “This was primarily attributable to volume growth in our Tire division and the stabilisation of industrial business at ContiTech. We expect the good development in the Rubber Group to continue over the remainder of the year, while the Automotive Group is expected to gain notable momentum again. For this reason, we are raising our forecast for the corporation’s adjusted EBIT margin from more than 10.5 per cent to around 11 per cent.

“We significantly increased our sales volumes for tyres and other products in the field of rubber and plastics technology compared with the previous year,” Degenhart added. “Overall, the Rubber Group achieved sales growth of more than five per cent after adjustment for exchange-rate effects and changes in the scope of consolidation. In the Automotive Group, this figure was almost three percent, slightly exceeding market growth.

“As anticipated, the Automotive Group’s start to the year was slightly above the level of 2015,” the Executive Board chairman continued. “Accelerating growth was slowed by the relatively sluggish start of production at some of our main customers at the beginning of the year. Furthermore, project starts and exchange-rate effects had a negative impact on the Automotive Group compared to the previous year, but the Group is expected to gain notable momentum as the year goes on.

Degenhart continues to view the medium-term growth trend in automotive electronics business as positive: “A very pleasing development is the rise in order intake in the divisions of our Automotive Group. Compared with the same period of the previous year, life-time sales acquired in the Automotive Group increased by more than one-third to a total of over €9 billion. This significant growth once again demonstrates our customers’ trust in our systems and technological expertise.”