|Continental Corporation reported a spike in its financial performance over the past year despite negative sentiments in the market.|
Continental Group has a sales hike of up to 50%
The Continental group announced a staggering 50 percent increase of gross profit of up to 1.9 billion Euros from the previous year.
Share price recorded double-digit earnings per share growth at 9.42 Euros, which means Continental managed to cut net indebtedness by close to 1.5 billion Euros and offered a proposed dividend amount of 2.25 Euros per share to its shareholders. The proposed dividend payout corresponds to a rise of 82 percent in 2012.
Continental’s CEO Dr. Elmar Degenhart at the Annual Financial Press Conference in Frankfurt/Main on Thursday commented, “At the same time, we have utilized our greater flexibility and given our future growth a good shot in the arm with higher spending on investments and R&D.”
He added, “At the Annual Shareholders’ Meeting on 15 May 2013, the Executive Board will propose payment of a dividend in the amount of €2.25 per share. That corresponds to a dividend payment ratio of around 24% relative to the net income attributable to the shareholders of the parent company.”
In relevant financial data, sales picked up 7.3% from last year to 32.7 billion Euros, and EBIT grew 18.3% to almost 3.1 billion Euros, which equates to a hike of 9.4 percent from 8.5 percent in 2011. Adjusted EBIT – in particular for acquisition-related amortization and special effects – rose by nearly 16% to 3.5 billion Euros. The adjusted EBIT margin was 10.8%, after 10.0% one year previously.
At the end of 2012, net indebtedness amounted to 5.3 billion Euros, well below the targeted level of less than 6.5 billion Euros. “Thanks to a very positive development in uncommitted funds, we undercut our indebtedness target by more than a billion euros. As a result, the gearing ratio fell to 58.2%, which was below our medium-range target of 60%,” Degenhart explained.
“In 2013 we intend to further reduce our net indebtedness and keep the gearing ratio below 60% despite the negative effects of changes in accounting regulations,” he added.
On the group’s cash flow sentiment, Continental had a strong free cash flow the past year at more than 1.6 billion Euros, much were attributed to solid net earnings and reduction in working capital ratio relative to sales. Other sentiments accounted for the group’s robust cash flow were; a decline in operating receivables, which dropped around 360 million Euros, interest expenses which fell by almost 100 million Euros, and a downtrend of working capital by over 560 million Euros. Continental Corp. estimates the company’s cash flow is bound to grow to more than 700 million Euros this year.
More Continental personnel globally & 2013 forecast
The personnel count within the Continental Corp. went up by 5,850 employees to around 170,000 of the group’s global workforce as of the end of last year.
In all, Continental is expecting the financial uptrend to continue this year, eventhough market environment remains challenging. The group hopes to boost overall sales up to 5% or more than 34 billion Euros this year at an adjusted margin of over 10%.