This is the word from the company on Apr. 29, following the public release of its quarter figures. “Despite the in part unsatisfactory trends on the tyre markets, we have clearly exceeded our expectations for the corporation on the whole. A help here was the satisfactory development of car production on the whole, particularly in Europe and Asia,” said Continental Executive Board chairman Manfred Wennemer. “Backed by the solid results for the first three months, we are confident that we will achieve our targets for the year. We will counter further rises in raw material prices with price increases, improvement in our product mix and further enhanced efficiency.”
Consolidated sales for the corporation as a whole during the first three months of 2008 rose 67.5% over the same period last year to 6.64 billion euros. Conti reports this increase is the result of both organic growth and from changes in the bases of consolidation, especially from the company’s acquisition of the VDO unit. Exchange rate changes are reported to have had an offsetting effect. “In order to make our operational performance more transparent despite the effects of the VDO acquisition, we are indicating in particular the effect of amortisation, with no effect on cash, of intangible assets from PPA (purchase price allocation). With the depreciation of tangible assets from the purchase of Siemens VDO, also with no effect on cash, the negative impact for 2008 will amount to 522.0 million euros," explained Wennemer.
EBITDA, at 884 million euros, was up 44.1% on the corresponding quarter of 2007, and the quarter’s EBIT of 456.7 million euros increased 4.56% over last year’s result. Net income attributable to shareholders of the parent however decreased 38.3% to 166.8 million euros, due mainly, says Conti, to the high interest burden, with earnings per share lower at 1.03 euro.
When looking at the divisions, Executive Board chairman Wennemer pointed out that a 38 million increase euros in raw material costs had impacted primarily the company’s two tyre divisions: "Without this effect, EBIT for the two divisions would have been at the same level as the previous year. It will take some time before the price increases implemented will have an effect on earnings. One must also take into account that, due to the long Easter holiday weekend in March, there were three fewer working days in the first quarter compared to 2007. Furthermore, the earlier vacation period has affected the purchasing behaviour of the end users," explained Wennemer.
The company’s Passenger and Light Truck Tires division achieved quarter sales of 1,202.9 million euros, up 4.8%, and EBIT was 142.8 million euros compared with 157.4 million euros in 2007. The Commercial Vehicle Tires division had sales of 328.3 million euros, a decrease of 4.7% on the previous year, with EBIT at 12.4 million euros (28.2 million in 2007).
"Nonetheless, the Passenger and Light Truck Tires division has already been able to largely offset the decrease in EBIT in the first quarter of 2008 with the seasonal increase in business in April. Another contributing factor was the good business trend in the Americas region. In the Commercial Tires division, we implemented measures to again significantly improve the margin." (Tyres & Accessories/Staffordshire, U.K.)
