Conti posts strong Q3, raises forecast

Hanover, Germany – Continental AG’s has raised its full-year forecast for earnings from its rubber group, despite what it called “a persistently challenging market environment”.

In its third quarter financial results, the German group said the rubber group generated sales of €11.7 billion in the first nine months of 2015 – from last year’s €10.1 billion for the same period.

Earnings, EBIDA, rose to 2.44 billion for first nine months, up from €2.16 billion in 2014.

“Due to the continued better-than-expected development in prices for crude oil and natural rubber (TSR 20), we are raising our forecast for the rubber group [EBIT margin] from about 16 percent to more than 16 percent,” said Conti in a statement.

Overall, the company has raised its estimate for the positive effect of lower raw material costs from around €200 million to about €250 million for the current year. This relates mainly to the rubber group.

“We are lowering our estimate for the average price of natural rubber again, from $1.58 (€1.46) per kilogram to $1.50 per kilogram. By contrast, we are leaving our forecast for the average price of butadiene, a base material for synthetic rubber, at $1.00 per kilogram,” the statement added.

Conti’s rubber group invested €536.3 million, equivalent to 4.6 percent of sales, which was down from last year’s 6.1 percent share.

Investments in the tire division, included production capacity expansion in North America as well as at European best-cost locations.

Among the sites named by Conti were Sumter, South Carolina, and Mount Vernon, Illinois, US; Puchov, Slovakia; Hefei, China; Otrokovice, Czech Republic; Lousado, Portugal; and Timisoara, Romania.

In the ContiTech division, investments were concentrated on the expansion of production capacity for the fluid technology, Benecke-Kaliko and conveyor belt business units.

Production facilities at German locations and in China, Hungary and the US were expanded and established.

At the locations in Changzhou, China, and Jorf Lasfar, Morocco, ContiTech invested in the construction of new plants for the Benecke-Kaliko and conveyor belt business units.