Continental AG posts gains through first nine months
Continental AG recorded consolidated net income of 245 million euros on consolidated sales of 8.485 billion euros for the first nine months of 2003. That compares to income of 217 million euros on sales of 8.484 billion euros for the same period last year.
After taking the euros-to-United States dollars exchange rate into account, Continental said net income ($273 millon) and sales ($9.4 billion) were up 36% and 20%, respectively.
EBITA (EBIT before regular goodwill (amortization) increased from 6.5% to 7.8% for the first nine months of 2003 vs. 2002.
Continental's Dr. Alan Hippe, executive board member for finance, controlling and law, said there were positive consequences of the company's reduced indebtedness during the first nine months of 2003:
* interest expense dropped to 96 million euros ($107 million), compared to 134 million euros ($124 million) in the corresponding period of 2002.
* net indebtedness (indebtedness minus liquid funds) was lowered by 789 million euros ($920 million).
* the gearing ratio (the ratio between the net indebtedness and shareholders' equity) improved to 93% from 135% a year ago.
"So we have achieved the 100% target we set earlier than planned," said Hippe. "We now want to further reduce the gearing ratio by the end of the year."
The Continental Automotive Systems subsidary posted increased earnings and sales as well. For the first nine months, sales increased to 3.47 billion euros.
In North America, sales volumes were weaker than in the comparable nine-month period of 2002, while in Europe the company outperformed last year's figures.
Approximately six million more tires, a 9% increase, were sold than in the prior-year period. The Passenger Tires division increased sales by 2.1%, to 2.821 billion euros ($3.139 billion).
Losses in the NAFTA region were more than outweighed by the good results in Europe, highlighted by particularly strong winter tire sales (up 13%).
Nine-month sales of the Commercial Vehicle Tires division declined 8.7% to 894 million euros ($995 million).
The higher cost of raw materials and additional social welfare expense in the U.S. had an adverse effect on earnings, said the company.
The ContiTech division also recorded increases in sales and earnings period to period.
The company said it is forecasting slight declines in automobile production in North America and Europe for the year. "However, since only about 60% of our activities are linked directly to the automobile manufacturers, and the rates of installation for key products are continuously rising, those declines will only have a small effect on our business."
Chairman of the Executive Board Manfred Wennemer said Continental AG is raising its earnings forecast. "We now anticipate an operating result (EBITA) for 2003 of more than 750 million euros ($835 million). For the year as a whole, we anticipate net income to be higher than for the previous year."