Continental’s Third-Quarter Earnings In Line With Expectations

In the first nine months of this year Continental (FRA:CON), the German-based holding company and automotive industry supplier, increased its sales by 9.1 percent year-on-year to €24.6 billion (£19.8 billion). EBIT rose by €437 million (£352 million) or 22.8 percent year-on-year to €2.4 billion (£1.93 billion) in the same period.

Adjusted EBIT for the corporation increased by €434 million (£349.7million) or 19.5 percent year-on-year to almost €2.7 billion (£2.18 billion) in the first three quarters. Continental said that despite increasing uncertainties it is confident about achieving its 2012 targets:
“After the positive overall development in the first three quarters, the start to the fourth quarter of 2012 has not given us any additional major cause for concern. Our current information indicates that consolidated sales from October to December are likely to be at least as high as in the third quarter of this year” said Chief Executive Dr Elmar Degenhart.

!m[](/uploads/story/680/thumbs/pic1_inline.png)In the second quarter the company surprised investors with strong results beating even the most bullish expectations. Conti posted adjusted EBIT of €948.3 million (£764 million) compared to Reuters’ forecast of €910 million (£733 million). Since 24 September the automotive supplier has been once again listed in the DAX, the top Deutsche Börse segment, which includes the most valuable companies in Germany.

Earlier this month Continental and other European tire makers received a nice boost when Luxembourg made snow tires mandatory on its territory over the winter months meaning all car owners will have to have two sets of tires. Poland, Belgium and Turkey are also considering similar requirements and the European Union is discussing a standardized winter-tire policy. Lars Holmqvist, Kreab Gavin Anderson consultant, said the new rules might net the industry €2 billion (£1.61 billion) in additional revenue.

Continental announced it expects its business to grow slightly next year as North America and Asia offset the difficult European business. Mr Degenhart told the Financial Times Deutschland that he believes Europe will stagnate at the current relatively low level with the trough having more or less been reached. So far this year the car market on the Old Continent has shrunk by 7.6 percent, leaving nearly all major car-makers with double-digit declines.

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