HANNOVER, Germany (Feb. 21, 2008) — Continental A.G. reported record sales and earnings for fiscal 2007, although results of the group's tire businesses were a mixed bag, with consumer tires' sales and earnings up and commercial vehicle tires' sales and earnings down, albeit only slightly.
For the year, Conti's passenger/light truck tire business unit reported 11.3-percent higher pre-tax operating earnings of $1.33 billion on 6-percent better sales of $6.81 billion. The commercial tire unit's earnings slipped 0.6 percent to $276.9 million on sales of $1.99 billion, a drop of 1.1 percent from 2006.
Overall, Conti reported pro-forma pre-tax operating profits of $2.52 billion on sales of $21.8 billion, improvements of 14.9 and 7.2 percent, respectively. The pro-forma results don't include data for Siemens VDO, the German automotive electronics business Conti acquired in December. On an annual basis, Siemens VDO is expected to increase Conti's sales by up to $14 billion.
For fiscal 2008, Conti expects the passenger/light truck tire business to continue to grow based on a constantly improving product mix, an improved business structure in the Americas and the full-year consolidation of the Matador tire business acquired in mid-2007, according to Chairman Manfred Wennemer. Earnings could be affected negatively by a renewed escalation of raw materials costs, he cautioned.
In commercial tires, Conti is counting on new capacities in Brazil and Slovak Republic to help keep costs under control as demand increases, Mr. Wennemer said, along with cost-reduction measures implemented at plants in Mount Vernon, Ill., and Hannover-Stoecken, Germany, to help boost earnings.
Mr. Wennemer warned that if raw materials cost increases exceed those of 2007, Conti will seek to offset them by increasing tire selling prices and instituting further efficiency measures.