Bloomberg News

Continental AG Sticks to Forecast on Quarterly Earnings Gain

May 03, 2012

Continental AG (CON), Europe’s second- largest auto-parts maker, reiterated sales and earnings forecasts for this year as growth in sales of car components and tires propelled first-quarter profit.

Revenue will rise more than 5 percent in 2012 to exceed 32 billion euros ($42 billion), while adjusted earnings before interest and taxes as a proportion of sales will match last year’s margin, Hanover, Germany-based Continental said today in a statement. First-quarter net income rose 31 percent to 482.9 million euros.

Continental expects second quarter sales to reach roughly the first-quarter level of 8.3 billion euros, the company said today. The company may raise it forecast after the second quarter should the stable development continue, Chief Financial Officer Wolfgang Schaefer said in an interview.

“We have a visibility of approximately 2 to 3 months, which gives us confidence,” Schaefer said by telephone.

First-quarter EBIT jumped 21 percent to 766 million euros, Continental said, reiterating figures released April 27. Restructuring in the powertrain unit payed off, Schaefer said. After adjusting prices to higher raw material prices, margins in the tire business were rising again, he said.

Chief Executive Officer Elmar Degenhart estimated April 27 that industrywide light-vehicle sales may rise this year amid “better-than-expected development” in North America and Asia, and said Continental’s revenue forecast may be too conservative.

Continental expects higher raw material costs this year of around 150 million euros for rare earths and 100 million euros for rubber.

Debt on the acquisition on Siemens’ former VDO unit is expected to fall below 6.5 billion euros by the end of the year, the company said. Because of the company’s debt, leeway for larger acquisitions is restricted and such a move is ruled out for this year, Schaefer said.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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