Margins fall at Conti following Siemens VDO buy

ERJ staff report (DS)

Continental AG as reported a significant decline in margins across the corporation for the six months to June 2008. Executive Board chairman Manfred Wennemer said the reduction of debt as the top goal: "We are confident that we shall be able to reduce the level of debt this year substantially."

In the rubber sector, the company reported slow progress, with a similar story of declining margins in both consumer and commercial tyres, although the Conti Tech unit performed better.

Consumer tyres reported a sales increase for the six-month period, to Euro 2536 million from Euro 2390 million. However, profit (EBIT) fell to Euro 322.6 million from Euro 357.2 million, meaning margs also fell to 12.7 percent from 14.9 percent a year ago.

Conti said replacement volumes in North AMerica grew substantially, and volumes in the European area also improved. At the OE level, Conti said overall volumes grew, with declines in the NAFTA region more than offset by increased volumes in Europe."

Conti added that raw material prices had increased by Euro 43 million in the six-month period, compared with the previous year.

Sales at the ContiTech unit also increased, to Euro 1631 million, compared with Euro 1561 million. Profits increased faster, to Euro 214.5 million from Euro 191.3 million a year earlier. Margins also improved, to 13.2 percent from 12.3 percent.

Conti said the air spring, elastomer coating vibration control and conveyor belt units contributed most to this performance. Higher raw materials prices had added Euro 9 million to the input costs, said Conti.

The commercial vehicle tyre unit performed badly, with sales, profits and margins all falling significantly. Sales fell to Euro 685.4 million from Euro 706.4 million, while EBIT fell by half to Euro 28.8 million from Euro 58.5 million. Margins declined to 4.2 percent from 8.3 percent.

Conti said replacement sales fell due to a poor market, but sales to OE customers had been maintained. Volumes in North America had been lower due to the overall market trend there. Raw material prices had increased by Euro 32 million in the six-month period, compared with the previous year.

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Press release from Conti

Six-month report from Conti