Continental's first-half income increases 96%
Continental AG posted net income of 683 million euros on sales of 14.9 billion euros for the first half ended June 30, 2011. That compares to income of nearly 349 million euros on sales of more than 12.6 billion euros for the same period last year.
Based on the exchange rate on June 30, 2011, Continental recorded net income (specifically net income attributable to the shareholders) of $983 million on net sales of $21.4 billion for the first half of fiscal 2011. It's earnings-to-sales ratio was 4.6%.
Based at least partially on its first-half results, Continental is raising its full-year outlook for fiscal 2011.
“We had previously forecast sales of more than 28.5 billion euros, but we are now expecting at least 29.5 billion euros," say Dr. Elmar Degenhart, executive board chairman. "We are also targeting an adjusted EBIT (earnings before interest and taxes) margin of around 10%, slightly more than the good 2010 figure of 9.7%.”
Continental announced 1H 2011 EBIT of nearly 1.3 billion euros, 26.7% higher than a year ago.
"At present, we do not see any reason why the good development in earnings should be weaker in the second half of 2011 than in the first half.”
Degenhart adds that although prices of natural rubber are declining somewhat, raw material expenses for Continental's Rubber Group probably will reach 850 million euros. The main reason for this is the spike in prices for synthetic rubber, due in part to the natural catastrophe in Japan.
In particular, this development will impact the Passenger and Light Truck Tires and ContiTech divisions in the second half of the year.
According to Chief Financial Officer Wolfgang Schafer, Continental also reduced its net indebtedness by 903 million euros to 7.1 billion euros. "For the current business year, we want to generate free cash flow of more than 500 million euros and reduce our net indebtedness to well below 7 billion euros."
For a look at how Continental performed in 1H 2010, click here.