HANOVER, Germany—Continental A.G. reported 8.3 percent higher pre-tax operating earnings for the quarter that ended March 31, and management is projecting Conti will “comfortably achieve” a full-year adjusted EBIT margin of more than 10.5 percent, owing to lower raw materials acquisition costs.
The pre-tax earnings rose to $1.1 billion, Conti said, on sales of $10.8 billion. Sales were up 14 percent, largely on the first-time inclusion of revenue from the former Veyance Technologies industrial rubber products business.
Conti CEO Elmar Degenhart said Conti expects earnings to benefit by about $170 million in lower raw materials acquisition costs, owing to the stable price trend for rubber and lower crude oil prices.
Conti's tire division reported 6.3 percent better pre-tax operating income of $653.6 million on 4.4 percent higher sales of $2.73 billion. Conti said consumer original equipment sales volumes were up globally, as were replacement market consumer sales in the Americas.
Commercial vehicle tire business was down.
In a first quarter financial statement, Degenhart said the first quarter showed the company was “growing faster than the markets.”
Furthermore, Continental said it continued to generate strong cash flow as in the previous fiscal year.
Looking at the full year, Conti said it expects shipments of car and light truck tires in North America to fall about 2 percent short of 2014, primarily because of lower entry-level tire imports from China, which are subject to antidumping and countervailing duties of at least 31 percent.
Commercial tire shipments in North America, on the other hand, are expected to grow about 3 percent, in line with the region's economic growth.
Globally, Conti said it expects replacement market demand for consumer tires to grow nearly 3 percent, in line with previous forecasts, whereas stagnating European demand for replacement commercial vehicle tires prompted Conti to cut its growth forecast here in half, to just 1 percent.