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March 09, 2018 01:00 AM

Continental management sees continued profitable growth in 2018

Tire Business Report
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    HANOVER, Germany—Continental A.G. management is projecting profitable sales growth in 2018 of nearly 7 percent after the company reported improved sales and earnings for fiscal 2017.

    Operating income for the year ended Dec. 31 rose 11.4 percent to $5.14 billion on 8.5 percent higher sales of $49.6 billion, improving the operating margin slightly to 10.4 percent, Conti reported.

    Net income rose 6.5 percent to $3.36 billion, or $16.82 per share, prompting the executive board to propose raising the dividend by 5.9 percent to just over $5 per share.

    Citing projected growth in car and light commercial vehicle production of more than 1 percent to 96.5 million vehicles, Conti management is forecasting the firm's operating margin this year will improve slightly to 10.5 percent on the higher sales.

    Conti's tire division reported 5.7 percent higher sales of $12.8 billion, but operating income fell 6 percent to $2.43 billion, eroding the operating margin by more than two points to 19 percent. Conti cited higher raw materials costs as the key reason for the lower earnings.

    The company anticipates a negative impact against earnings this year of roughly $55 million due to rising raw materials costs, but said price increases instituted in the first half of 2017 should counteract this to an extent.

    The company recorded volume growth of 3 and 5 percent, respectively in the passenger/light truck and commercial tire businesses.

    Summing up his company's performance and outlook, Degenhart said: "Continental is a pioneer when it comes to technology. We are continuing to invest heavily in the technologies of tomorrow, and this strategy is paying off.

    "Our innovative technologies and the intelligent use of software, electronics and sensor technology are allowing us to make automated and autonomous driving, along with connectivity and electrification, a reality."

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