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Continental AG Profit Climbs, Ups Margin View; Stock Dips

Continental AG 110915

German tire maker Continental AG (CTTAY.PK) Monday reported higher profit in its nine-month period, benefited by strong growth in sales and margin. Looking ahead, the company raised its margin view, and maintained sales forecast for fiscal 2015. The shares were losing around 4 percent in the early morning trading in Germany.

For the nine-month period, net income attributable to shareholders of the parent jumped 16 percent to 2.08 billion euros from last year's 1.80 billion euros. Earnings per share rose to 10.42 after 8.99 in the same period of the previous year.

Earnings before interest and tax or EBIT climbed 30.6 percent year-on-year to 3.2 billion euros. EBIT margin was 10.9 percent, higher than 9.6 percent in the previous year. Adjusted EBIT grew 15.6 percent from last year to 3.4 billion euros. The adjusted EBIT margin was 12 percent after 11.4 percent in the previous year.

EBITDA, a key earnings metric, was 4.53 billion euros, higher than last year's 3.81 billion euros.

Sales for the period climbed 14.2 percent to 29.22 billion euros from 25.59 billion euros last year. Before changes in the scope of consolidation and exchange rate effects, sales rose 3.3 percent.

Automotive Group generated sales of 17.6 billion euros. At 8.8 percent, the adjusted EBIT margin was higher than the previous year's level of 8 percent.

Rubber Group generated sales of 11.7 billion euros, and improved its adjusted EBIT margin to 18.3 percent from 17.5 percent in the previous year.

Elmar Degenhart, chairman of Continental's Executive Board, said, "Overall, we can look back at a solid third quarter in a difficult environment. We compensated for both the slower growth in passenger-car production in China and the decline in industrial business with steady growth in Europe and North America."

The company added that the automotive supplier is also benefiting from a rising proportion of vehicles being equipped with state-of-the-art electronics.

Looking ahead, the company raised its forecast for adjusted EBIT margin to more than 11 percent, after the company had previously anticipated around 11 percent.

Further, the company confirmed its sales projection for 2015 of more than 39 billion euros.

Based on the positive business performance, the firm also raised its outlook for free cash flow before acquisitions to more than 2 billion euros from its previous level of at least 1.8 billion euros.

In Germany, Continental shares were losing around 4.7 percent to trade at 214.16 euros.

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