ERJ staff report (TP)
Hanover, Germany – Continental reported a growth of 2.1% in the first half of 2014, bringing consolidated sales to €16.9 billion.
It is also increasing its earnings forecast for fiscal 2014.
“We now intend to achieve an adjusted EBIT of around 11% instead of minimum 10.5% previously forecast. Because of the good performance in the first half of the year, we now expect free cash flow before acquisitions to exceed €1.5 billion, having previously anticipated more than €1.2 billion,” said Continental chairman of the executive board Dr. Elmar Degenhart.
Adjusted for effects related to the scope of consolidation and to exchange rates, consolidated sales climbed year-on-year by 5.7% in the first half of the year.
Before these effects, however, growth was 2.1%, bringing consolidated sales to €16.9 billion. In the first half-year alone, the negative currency translation effect was approximately €600 million.
Degenhart said: “The favourable development of raw material costs as well as continual improvements in efficiency contributed to the more positive forecast.
“As we already indicated when reporting about the first quarter, however, exchange rate effects will have a strong negative impact on sales in 2014. Instead of €700 million, we are now assuming a negative effect of about €1 billion. We therefore expect the increase in consolidated sales to be more limited, with sales rising to about €34.5 billion.”
As at 30 June, EBIT also increased faster than sales and grew by 11% year-on-year to €1.8 billion. This equates to a margin of 10.7% after 9.8% in the previous year.
In the first half of the year, adjusted EBIT climbed by 10.2% compared to the same period of the previous year to nearly €2 billion. At 11.6%, the adjusted EBIT margin thus exceeded the 10.8% after the first six months of 2013.
Continental increased its research and development expenses by 8.8% compared to the first half of 2013 to around €1.1 billion. This corresponds to 6.3% of sales after 6.0% a year ago.
At the end of the second quarter, Continental had 186,278 employees, representing an increase of some 8,500 in comparison to the end of 2013. This was due primarily to production launches, the expansion of research and development in the Automotive Group and additional production capacity, sales channels and acquisitions in the Rubber Group.
In the first six months of this year, the Automotive Group generated sales of €10.3 billion. Before exchange rate effects, sales grew by 6.7% in the first half of the year. At 8.4%, the adjusted EBIT margin was higher than the previous year’s level of 7.8%.
In the first half of the year, the Rubber Group generated a slight increase in sales to €6.6 billion, achieving an adjusted EBIT margin of 17.5%, which is likewise above the comparative figure of 16.0% for the previous year.
More details in the 43-page financial report (PDF).