Continental AG recorded consolidated net income of 314 million euros ($355.7 million) for the 2003 fiscal year. That compares to net income of 226 million euros ($256 million) in 2002.
Consolidated sales, which included results from the consolidation of Continental Sime Tyre in Malaysia for the first time, totaled 11.5 billion euros ($13.03 billion).
Continental's earnings before interest, taxes and amortization (EBITA) increased by 23.2% to 855.2 million euros ($968.9 million).
The company's gearing ratio (the ratio between net indebtedness and debt) also improved significantly, according to Manfred Wennemer, chairman of Continental's executive board.
"We managed to reduce net indebtedness by 730.4 million euros ($919.94 million) to 1,168.6 million euros ($1.47 billion), resulting in a gearing ratio of 58.9% compared to 110.7% at the end of 2002. This is well below our target of 100%."
Here are Continental AG's 2003 financial results by division.
1. Passenger and Light Truck Tires. Sales increased by 8.4%. Taking into consideration changes in the scope of consolidation due to Continental's subsidiaries in Mexico and South Africa and exchange rate effects, sales went up 3.4% to 3.907 billion euros ($4.43 billion).
Overall, EBITA rose by 87.3% to 345.8 million euros ($391.76 million).
Continental sold close to 100 million passenger tires in 2003 vs. 91 million in 2002, according to the company.
Continental says "extremely good results" in Europe more than offset the losses in the NAFTA region, where in 2003 capacity at one of the plants was reduced, administrative staff was cut and the outsourcing of tire logistics operations was begun.
Additional social security expenses in the United States and higher material prices impac-ted the results.
2. Commercial Vehicle Tires. The division recorded sales of 1.262 billion euros ($1.429 billion), which were down compared to 2002's total of 1.311 billion euros ($1.240 billion).
Before changes in the scope of consolidation relating to the subsidiaries in Mexico, South Africa and Continental Sime Tyre (which was assigned to the division in October 2003), and before exchange rate effects, sales were up 2.8%.
The commercial tire division recorded EBITA of 82.4 million euros ($93.3 million), compared to 92.9 million euros ($87.89 million) in 2002.
"Worldwide we sold a total of six million truck tires, representing a 2% increase in sales volume over the previous year," says Dr. Hans-Joachim Nikolin, the executive board member responsible for the Commercial Vehicle Tires division.
In North America, Continental's original equipment truck tire sales were up 25%, while replacement volumes were slightly down compared to the previous year. Overall European sales rose by 11%.
3. Continental Automotive Systems (CAS). Sales increased by 7.2% over 2002. Taking into account changes in exchange rates, sales were up from 4.568 billion euros to 4.626 billion euros ($5.24 billion).
The division boosted EBITA by 18.5% to 369.5 million euros ($418.61 million).
The CAS Electronic Brake and Safety Systems, Powertrain & Chassis, and Comfort Electronics business units each recorded increases in sales volumes.
"In 2003, we sold more than three million ESP (Electronic Stability Program) units for the first time, representing a volume increase of 29%," says Dr. Wolfgang Ziebart, deputy chairman and head of the CAS division.
4. ContiTech. With its eight business units, ContiTech global operations achieved an increase in sales of 3.8%. Taking changes in exchange rates into account, sales rose 2.7% to 1.812 billion euros ($2.05 billion)
Continental says that thanks mainly to product innovations and cost-cutting measures, ContiTech increased its EBITA by 2.5 million euros to 144 million euros ($163.1 million).
Continental had this to say about its goals in 2004:
"Although the global economy started to pick up in the course of 2003, it is not yet possible to say whether there will be a sustainable economic recovery. As in previous years, there is still a risk that the forecasted recovery for the global economy will be weaker, or fail to materialize.
"The executive board of Continental AG anticipates that total passenger car production in 2004 will remain at the level of the previous year... with a slight decline in Western Europe and a strong increase in Eastern Europe and Asia.
"It is expected that production in North America will also be at the prior year's level. A slight rise in Western European truck output and a strong increase in the NAFTA is anticipated."
Wennemer says price pressure will increase, especially in the U.S. "due to the continuing rebate programs of the automobile manufacturers. This is one more reason why we are analyzing major restructuring measures that may be required in the passenger tire business in North America.
"We expect to break even on an operating basis in our North American passenger and light truck tires business," he adds.
