Continental rose to a six-month high in Frankfurt trading after reporting second-quarter earnings before interest and taxes of 39 million euros. Sales fell 28% to 4.76 billion euros, the Hanover-based company, purchased early this year by ball-bearing maker Schaeffler Group, said today in a statement.
Car-market declines in the U.S. and Europe have cut orders at Continental, reducing its ability to repay debt from buying Siemens AG’s VDO auto-parts unit in 2007. Continental, which is scaling back its workforce, said today that cost reductions helped stem losses at the powertrain and vehicle-interior units, countering a revenue drop exacerbated by Chrysler LLC’s production suspension in May and June.
“At first glance, the results don’t look as bad as feared,” said Hans-Peter Wodniok, an analyst at Fairesearch independent research firm in Frankfurt. “But Conti’s problem is debt, and the net figures are likely still to be a catastrophe.”
Continental is scheduled to report detailed first-half earnings on July 30, when CEO Karl-Thomas Neumann will present options for the manufacturer’s relationship with Schaeffler during a supervisory board meeting. The alternatives include a merger as well as independence.
The company is suffering from “paralysis due to its uncertain future,” Neumann said in today’s statement, adding that he expects the board to make “clear direction-setting decisions” at the meeting. (Tire Review/Akron)
