Conti eyes 5% growth, 10% earnings ratio in 2012

ERJ staff report (TB)

Hanover, Germany -- Continental A.G. management expects sales to rise more than 5 percent this year, to about $43 billion, even though the firm is projecting global vehicle growth of only about 1.3 percent and only “slight” growth in key replacement tyre markets.

Conti is basing its growth projections on the “rapid development and large-scale marketing of innovations,” according to comments CEO Elmar Degenhart made during the presentation this week of the firm's 2011 fiscal results.

Degenhart pointed out Conti intends to stay at the forefront of the industries where it competes with increasing spending on research and development and capital improvements.

Conti spent a record $2.2 billion on R&D last year and intends to increase that more than 6 percent this year, Degenhart said. That amount of spending equates to about 5.3 percent of sales.

The company's capital expenditures hit $2.4 billion last year, also a record, and the firm intends to boost that by nearly 13 percent this year to roughly 6 percent of sales.

Degenhart said Conti is basing its growth forecast on the assumption that global production of consumer vehicles will increase to about 77 million units-including 4-percent growth in North America to 13.7 million units-and production of commercial vehicles should rise 7 percent to 3.7 million units.

Degenhart said Conti's banking on global demand for replacement car/light truck and commercial vehicle tyres to grow 3 and 4 percent, respectively, although demand in Europe and North America will grow only slightly.

At the same time, he said, Conti expects to match the pre-tax operating income margin achieved in 2011 of 10.1 percent again this year.

From Tire Business (A Crain publication)

Announcements from Continental