Tire Maker Rolls Out Good News

Hanover, Germany-based Continental AG reports its sales in the first half of 2004 were up 9.9% and its consolidated results grew 21.4%, despite restructuring costs for its passenger tire operations in the U.S.

The company said that including exchange rate effects and consolidation changes, sales were up 9.0% from EUR 5,646.8 million ($6,243.7) to EUR 6,157.4 million ($7,558.2).

The international tire and automotive supplier has demonstrated a “powerful ability to grow in a phase when the global automotive economy continues to be rather sluggish,” said Manfred Wennemer, chairman of the Continental Executive Board.

The company reported consolidated net income after taxes went up from EUR195.4 million ($216.1) to EUR221.4 million ($271.8), with earnings per share rising from EUR1.50 ($1.70) to EUR1.63 ($2.00).

Continental said sales of its Continental Passenger and Light Truck Tires division were up 8.3% for the first half of this year. Including exchange rate effects, sales were up 5.3% from EUR 1, 825.2 million ($2,018.1) to EUR 1, 921.8 million ($2,359.0). Volumes sold to the automobile industry rose 14%. On the replacement side, sales were up 9% for Europe but declined for the NAFTA region.

Half-year sales of its Commercial Vehicle Tires division rose 10.0% before foreign exchange effects and changes in the scope of consolidation. Including exchange rate effects and the consolidation of Continental Sime Tyre, sales climbed 23.1% percent from EUR 579.9 million ($641.2) to EUR 714.0 ($876.4) million. Total volume sold to vehicle OEMs and the replacement market increased 10 % in Europe. A 2% gain was recorded for sales volumes in the NAFTA region, where Continental pointed out deliveries to the automotive industry were notably higher but replacement sales declined.

The higher cost of materials and “additional social welfare expense” in the USA continued to have an adverse effect on earnings, the company stated. Nevertheless, the operating result (EBIT) of the division rose from EUR 33.4 million ($33.4) to EUR 43.3 million ($53.2), for a 29.6% increase. Return on sales increased from 5.8 to 6.1%.

"We anticipate that consolidated sales will increase for 2004 as a whole,” said Wennemer. “Moreover, there are indications that we will outperform our previous year’s operating result – despite the charge due to the restructuring at our Mayfield [KY] tire plant in the U.S."

For more information on Continental’s commercial tire operations in the U.S. and Canada, go to www.conti-online.com

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