Continental AG posts optimistic results in 2002
Continental AG recorded consolidated net income of 226 million euros on sales of 11.4 billion euros in 2002. That compares favorably to 2001, when the company recorded a net loss of 257.6 million euros on consolidated sales of 11.22 million euros.
When the exchange rate is taken into account, Continental earned $213.8 million on sales of $10.8 billion in 2002.
Manfred Wennemer, chairman of the executive board says Continental achieved the best operating result in the history of the company, "despite a background of intense uncertainty about the economic situation in the automotive business."
The 1.6% increase in consolidated sales was influenced by the first-time inclusion of Continental Temic for 12 full months. Otherwise, sales would have been a little less than the previous year.
The consolidated operating result before regular goodwill amortization (EBITA) rose from 32.8 million euros to 694.3 million euros ($656.9 million). When Continental's one-time restructuring expenses from 2001 are eliminated, the company still registered an increase of 193.9 euros.
At the end of 2002, Continental's net indebtedness amounted to 1.899 billion euros, a decrease of some 702 million euros from year-end 2001.
Continental's goal of returning to a reasonable relationship between shareholders' equity and debt is closer to reality; its telltale gearing ratio has improved from 168% at the end of 2001 to 111% in 2002.
Additions to property, plant and equipment and software dropped from 740.8 million euros ($663.8 million) in 2001 to 620.0 million euros ($586.6 million) in 2002, which represents a capital expenditure ratio of 5.4% (vs. 6.6% in 2001).
Here's a synopsis of how each of Continental's divisions fared.
Passenger Tires. With sales of 3.777 billion euros ($3.6 billion), the Passenger Tires division fell 6% short of the previous year.
The company cited the disposal of the British retail chain National Tyre Service, the drop in the U.S. dollar exchange rate, and the weak replacement business in both the U.S. and Mexico as the primary reasons.
The Passenger Tires division increased its EBITA by 327.7 million euros to 184.6 million euros. The increase was impacted by the impairment of goodwill in the amount of 34 million euros, while the previous year's result was impacted by restructuring expenses of 344 million euros.
Sales volume in the European replacement business "rose encouragingly," according to the company, with new records being set for winter and high-performance tires. Volumes in the U.S. and Mexico, however, "fell short of expectations."
In the original equipment sector, Continental increased its market share.
Commercial Vehicle Tires. The commercial tires division reported a slight decline in sales from 1.320 billion euros ($1.2 billion) in 2001 to 1.311 billion euros ($1.19 billion) in 2002. However, after adjusting for exchange rate effects, sales were up 3.4%.
The EBITA figure for the division rose 182.6 million euros ($172.8 million) to 92.9 million euros ($87.9 million).
In the U.S., volume growth in the replacement truck tire business more than compensated for the decline in OE tire shipments. In Europe, sales volumes in the OE and replacement markets were slightly less than the previous year.
Continental Automotive Systems (CAS). Sales, including Continental Temic for 12 months, grew 14.6% to 4.568 billion euros.
EBITA for the division jumped 68.7% to 311.9 million euros.
ContiTech. Sales of the ContiTech division amounted to 1.764 billion euros, a slight decrease from 2001. Disregarding changes in the scope of consolidation due to the sale of small parts of the company, sales would have slightly exceeded the 2001 figure.
ContiTech boosted its EBITA by 16% to 141.5 million euros.
Continental's executive and supervisory boards will propose a dividend of $.481 cents per share for 2002 at the annual shareholders' meeting on May 23.
As of the close of trading on April 8, Continental's stock was trading at $14.63 a share.