HANNOVER, Germany (July 31, 2008) — Continental A.G. is confident it can match last year's pre-tax earnings margin of 9.3 percent despite a decline in operating margin for the six months ended June 30.
Conti blamed the lower earnings margin on the difficult market environment and integration and restructuring expenses related to acquisitions made last year.
The firm's passenger/light truck and commercial vehicle tire divisions both suffered earnings declines in the period, with the latter also generating lower sales than in 2007. Conti cited higher raw material prices for the earnings declines.
The passenger/LT business unit reported pre-tax operating earnings of $507.6 million on sales of $4 billion, for an operating margin of 12.7 percent. Earnings were off 9.9 percent whiles sales grew 6.1 percent.
Conti said its sales volumes grew in both the European and North American replacement markets. Original equipment volume was up overall, with European sales offsetting declines in North America.
Pretax operating profit for the commercial vehicle tire sector plunged 55.7 percent to $42 million as sales slipped 3 percent to $1.08 billion.
Sales and operating earnings at the ContiTech unit also increased, to $2.58 billion and $336.7 million, respectively, for an operating margin of 13.2 percent.
Conti said the air spring, elastomer coating vibration control and conveyor belt units contributed most to this performance.
Overall, Conti reported pretax operating income of $1.94 billion on sales of $20.9 billion.