Continental Corp. sees slight growth despite weak market sentiments

 continental-strategizes-implement-fully-automated-driving-2025 Continental Malaysia recently held a media briefing on financial updates for the first three quarters of the year and 2014 activities, including the 2014 FIFA World Cup where Continental is one of the primary sponsors. Continental in the country is made up of the Tyre and Automotive divisions.

Continental Tyre Malaysia achieves positive sentiments with OE tyres and increased number of dealerships

Continental Tyre M’sia has had a strong first nine months of the year as the brand was selected as the official OE tyres for ten marques and over 32 variants. The car brands and variants included both domestic and global OEMs. On the domestic front, the new Toyota Vios runs 100 percent on OE Continental CC5 tyres, while the CC5 and certain Conti tyre ranges are preferred by Kia, Peugeot, Subaru, Volkswagen, Volvo, Mazda, Proton, Nissan and Toyota variants. Its retail outlets have increased to a total of 900 outlets which comprise Continental BestDrive, Dunlop, Sime Tyres and Viking. Furthermore, Dunlop and Conti. Best Drive dealerships make up the bulk with over 75 percent of the 900 dealerships.

The first nine months also saw Continental Tyre M’sia introduce the Viking range of tyres, and soon the Continental MC5 limited edition with World Cup insignia. The Conti MC5 World Cup edition will be offered in three sizes: 205/50R16, 215/55R17 and 235/55R18. Additionally, a new campaign entitled ‘Upgrade your Ride’ have been planned for the first quarter of next year.

Globally. Continental’s three divisions have achieve a consolidated sales spike of 1.2% year-on-year to approximately €25 billion in the first nine months of this year. The operating result (EBIT) increased by 4.0% year-on-year to more than €2.5 billion as at September 30. This corresponds to a margin of 10.1% after 9.8% in the previous year. The adjusted operating result (adjusted EBIT) increased by 3.1% in the first three quarters as compared to the same period of the previous year and amounted to €2.8 billion. At 11.3%, the adjusted EBIT margin was higher than its level of 11.0% after the first nine months of 2012. More precisely, the Tyre Group achieved €9.9 billion, up to 17.3% from last year’s 16.2%; while the Automotive Group tallied €15 billion, matching last year’s 7.9% level. The company had predicted that the entire consolidated sales for the year would top up to around €33.5 billion.

Net income attributable to the shareholders of the parent company increased by 8.5% in the first nine months of this year to nearly €1.6 billion. Earnings per share rose to €7.88 after €7.26 in the same period of the previous year.

Based on a positive overall performance in the first nine months, Continental is raising its forecast for the adjusted EBIT margin from more than 10% to at least 10.5% for the current year. In addition to the good operating performance, the development of raw material prices was also a key factor, with prices for synthetic rubber in particular rising less steeply than expected.

Continental Corp increase crucial investments

In the first three quarters of this year, Continental Corporation invested a total of approximately €1.3 billion in property, plant and equipment, and software. This resulted in a capital expenditure ratio after the first nine months of 5.4% compared with 5.1% in the same period of the previous year. Research and development expenses in the period from January to September amounted to just short of €1.5 billion, equivalent to 5.9% of sales as compared to the previous year’s ratio of 5.5% of sales.

Further financial data revealed a lower net indebtness by more than €1.2 billion year-on-year to just below €5.6 billion, a hike in free cash flow by €246 million to €414 million (attributed to the sale of the shares in S-Y Systems), and lower interest expense from €432 million to €416 million. In the personnel department, Continental Corp. has over 177,387 employees as at the end of the third quarter.

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