Corporate | 3 August 2016 08:30
Continental AG: Continental Raises Earnings Forecast on Basis of Good Half-Year Figures
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DGAP-News: Continental AG / Key word(s): Interim Report/Half Year Results
Continental Raises Earnings Forecast on Basis of Good Half-Year Figures
– Forecast for adjusted EBIT margin increased to over 11 percent – Sales growth of four percent to more than EUR20 billion before changes in the scope of consolidation and exchange-rate effects – EBIT rises by six percent to EUR2.3 billion – Net income up by 13 percent to EUR1.6 billion
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Further increase in number of employees to approximately 215,000
Hanover, August 3, 2016. The international technology company Continental is raising its earnings forecast for the current fiscal year on the basis of good half-year figures. “We are aiming to achieve an adjusted EBIT margin of over 11 percent for the year as a whole and thus exceed the previously anticipated margin of around 11 percent,” said Dr. Elmar Degenhart, Continental’s chairman of the Executive Board, at the presentation of the business figures for the first six months of the year on Wednesday. The reason for the increase is the Rubber Group’s excellent operating performance: “The very positive unit sales development in our tire business in the first six months has given us an additional boost.” The company’s development is also being helped by the trend in the prices of key raw materials for the production of tires and other rubber products. Over the year as a whole, the price increases are currently expected to be lower overall than forecasted at the end of the first quarter of 2016. The chairman of the Executive Board gave a positive assessment of the second quarter of 2016: “As expected, our automotive business picked up momentum in the second quarter. With organic growth of around five percent, we grew at a faster rate than the market again in the second quarter. At the same time, we also improved our earnings. Another very pleasing aspect is our order intake, which increased to more than EUR18 billion lifetime sales in the first half of the year. The Rubber Group continued its positive sales and earnings development. This was thanks in particular to a further rise in sales volumes for tires and further stabilization of industrial business.”
In Degenhart’s view, the half-year results confirm the expectations for the current fiscal year: “Over the remainder of the year, we expect the positive sales momentum to continue in line with our outlook for the fiscal year. However, markets are currently expected to remain volatile due to continuing uncertainty, particularly in light of recent political developments.”
1 Before changes in the scope of consolidation.
Free cash flow before acquisitions
saw a year-on-year increase of EUR159 million to more than
The Continental Corporation’s net indebtedness amounted to EUR3.4 billion at the end of the first half of the year. The main reason for the increase compared to the first quarter of 2016 was the distribution of the dividend for fiscal 2015 in the amount of EUR750 million in May 2016. Compared to the end of 2015, net indebtedness decreased slightly by EUR96 million. The gearing ratio amounted to 25.8 percent at the end of June 2016 (previous year: 34.1 percent). The equity ratio was around 39 percent.
As at June 30, 2016, Continental had a
liquidity
buffer of more than EUR5.2 billion, comprising
Compared to the previous year,
interest expense
decreased by EUR50 million to EUR98 million. The negative net interest result also fell by EUR50 million year-on-year to EUR49 million in the first half of 2016. In particular, valuation effects from changes in the fair value of derivative instruments and from the development of exchange rates had a positive effect here overall. The positive contribution to earnings in the first half of the year amounted to more than EUR54 million. “For the year as a whole, we still anticipate net interest expense of less than EUR250 million, since there may be a reversal in the positive valuation effect in the second half of the year,” explained Schäfer.
Increased investment in pioneering technologies In the first six months of 2016, Continental invested EUR920 million in property, plant and equipment, and software. As a result, the capital expenditure ratio amounted to 4.6 percent after 4.2 percent in the comparative period of the previous year. In the first half of 2016, research and development expenses increased by 13.2 percent year-on-year to EUR1.4 billion. This corresponds to a ratio of 7.2 percent of sales after 6.5 percent in the same period of the previous year. “Our growing financial strength enables us to increase investment in research and development. In doing so, we intend to set the course for pioneering technologies at an early stage and continue our rapid, profitable growth on a long-term basis. Zero road-traffic accidents, clean air, and intelligent mobility are the relevant goals in this context,” said Degenhart. As at the end of the second quarter of 2016, the corporation had approximately 215,000 employees , around 7,000 more than at the end of 2015. The number of employees in the Automotive Group rose by more than 5,000 as a result of increased production volumes and expansion of research and development. In the Rubber Group, further expansion of production capacity and sales channels led to an increase of almost 1,900 employees. Compared with the reporting date for the previous year, the total number of employees in the corporation was up by around 9,600. In the first six months of this year, the Automotive Group achieved sales of EUR12.2 billion. The adjusted EBIT margin was 8.1 percent. In the first half of 2016, the Rubber Group generated sales of EUR7.9 billion and improved the adjusted EBIT margin by 2.3 percentage points year-on-year to 18.8 percent.
Financial reports:
2016-08-03 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
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| Language: | English | |
| Company: | Continental AG | |
| Vahrenwalder Straße 9 | ||
| 30165 Hannover | ||
| Germany | ||
| Phone: | +49 (0)511 938-1068 | |
| Fax: | +49 (0)511 938-1080 | |
| E-mail: | ir@conti.de | |
| Internet: | www.conti.de | |
| ISIN: | DE0005439004 | |
| WKN: | 543900 | |
| Indices: | DAX | |
| Listed: | Regulated Market in Frankfurt (Prime Standard), Hamburg, Hanover, Stuttgart; Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Tradegate Exchange; Luxemburg, SIX | |
| End of News | DGAP News Service |