Dax Return Makes an Impact for Continental
A year after returning to the Frankfurt’s DAX stock exchange, Continental’s management is saying that it “has profited noticeably from its return to the DAX.”
Hannover-based Continental AG is a leading automotive supplier and – according to the company – is “the choice of leading car manufacturers, offering award-winning tyres that deliver responsive braking in all weather conditions.”
A year after returning to the Frankfurt’s DAX stock exchange, Continental’s management is saying that it “has profited noticeably from its return to the DAX.”
Bridgestone has teamed up with competitor Continental to develop an advanced tyre pressure monitoring system for commercial vehicles. The two companies will join forces to mass produce the system which is expected to be released into the market in 2007. The companies are aiming to position the product as a “global standard.”
Chinese company Qingdao Doublestar has announced that it is forming a joint venture with Continental in China.
In a statement to the Shenzhen stock exchange the Chinese company is said to have reported that Conti is expected to start negotiations on financial terms and other venture details.
Once again the market’s focus is on China, where passenger car sales surged 76 per cent last year to 1.97 million units. Goodyear Tire & Rubber, Michelin and Yokohama all have existing operations within the expanding market.
The National Highway Traffic Safety Association (NHTSA) has proposed that tyre monitoring systems should be installed on 50 per cent of new vehicles sold after 1 September 2005, according to DB Global Equities New York.
The new proposal requires car manufacturers to install a direct tyre monitoring system to indicate when a tyre is more than 25 per cent under inflated and will eventually include 100 per cent of new cars by 1 September 2007. NHTSA estimates the cost of each device at between £26-40.
Industry representatives believe that by 2007 TPMS could grow to a $1 billion (£55 million) per year revenue opportunity. Currently there are at least five major auto parts suppliers competing in this segment of the market: Lear, Delphi, TRW, JCI and Continental. The announcement could also mean good news for Beru, a leading producer of direct measuring systems that provides software to Lear through a licensing fee agreement.
Continental increased its European tyre prices by three per cent in August, completing its round of 10 per cent price increases in the European replacement tyre markets within that month.
Morgan Stanley views this as “a sign of confidence in the outlook for the European part of Continental’s tyre business.” Based on its current 2005 European tyre revenue forecast, it estimates that a three per cent increase (assuming no giveback to consumers), would equate to €80-85 million additional profits.
More importantly the company also anticipates that this will allow Conti to “stay ahead of increased raw material costs” which it expects to register a global increase in the tyre division of the same magnitude
Nick Gregg, group managing director at ATS Euromaster, has been appointed to join the Tyre Industry Council later this year, strengthening the retail representation on the Council.
The TIC claims that its tyre safety work is expanding, particularly in the area of tyre safety clinics and roadside tyre checks, and so welcomes the support from retailers as well as tyre manufacturers.
Continental chairman, Manfred Wennemer, has said that the company will announce that it has agreed to a joint venture in China, this week, according to German media sources.
Continental’s shares prices reached historically high levels last week. The influential automotive supplier’s impressive share prices are attributed to the company’s strong first half earnings, which have increased 46 per cent at the operating level.
At the same time French car manufacturer, Renault, has achieved a similarly impressive share price. According to analysts, the results are due to the car manufacturer’s Megane II and the recently launched Modus model.
A month after Continental announced that Dr Karl-Thomas Neumann was being recommended to the board, the international automotive supplier has confirmed that Dr Neumann will begin his new role on 1 October. In this position Dr Neumann will head up Continental Automotive Systems. Dr Neumann had previously been head of the electrics and electronics unit of the VW group of brands, where he had group-wide responsibility for electronic modules.
Continental Tire North America has announced that its Eco Plus truck tyres are now a published option at all Volvo Truck dealerships nationwide.
“Rising fuel prices have increased the importance of finding ways to lower operating costs and improve the bottom line,” said David Misbrener, CTNA account manager for Volvo Trucks North America. “Continental’s Eco Plus tyre technology provides impressively low rolling resistance for excellent fuel economy and long original mileage. We are very pleased that this premium line of tyres is now also available at Volvo dealerships for fleets trying to find a way to lower their operating costs.”
According to the company tests conducted at its Uvalde proving grounds (SAE fuel consumption test J1264) show that, with Continental HSL Eco Plus tyres in the steer position and the HDL Eco Plus tyres on the drive axle, fuel mileage is increased by up to 7.2 per cent over conventional tyres
The French investment and insurance group AXA has announced that is has acquired 11.75 per cent of Continental’s shares. AXA has held shares in Continental before now but only recently publicised the fact in order fulfil German law. According German legislation, companies disposing of more than 10 per cent of their shares have to make this knowledge public.
Industry Media sources, including European Rubber Journal and Tire Business, are reporting that TW-Fitting, a Group Michelin and Continental AG joint venture, will set up a factory to supply Mercedes-Benz America with mounted tyre/wheel assemblies.
Rainer Strang has been appointed to strengthen the PR team of the Continental AG’s two tyre divisions. He will is expected to begin his new position on 1 October, but will definitely start by 1 November 2004. Mr Strang succeeds Markus Burgdorf, who left the company in spring in order to work independently of the company. “I am looking forward to the vocational challenges in one of the most successful automotive industry suppliers in the world,“ comments Strang on his move to Hanover.
Continental AG has been awarded a major order by the Ford Motor Company. As a result, Continental will be stepping up its supply of stability control systems, to Ford. For the 2005 model year, AdvanceTrac with RSC will be standard equipment on Ford Explorer, mercury Mountaineer, Lincoln Navigator and Lincoln Aviator. The system will also be available on the Ford Expedition.
Continental’s recently published and extremly favourable half-year business results seem to have fired the imagination of analysts. After the German tyre manufacturer announced 9.9 per cent increase in turnover and a 21.4 per cent increase in EBIT, half a dozen company and market reports have been published arguing that Continental shares still have considerable development potential.
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