Continental invests €200m in rubber group expansion

Hanover, Germany – Continental AG’s rubber group, which includes the company’s tire and ContiTech segments, has invested €195.9 million in expanding its businesses within the first quarter of 2016.

The German automotive and tire supplier reported 4 May that the amount was invested in expanding tire production capacity in North America as well as at “European best-cost locations”.

In the tire business, said Conti, there were “major additions” to the existing production sites in Sumter, South Carolina; Puchov, Slovakia; Hefei, China; and Lousado, Portugal.

In the ContiTech division, expansions involved additional production capacity for the Mobile Fluid Systems, Benecke-Kaliko Group and Conveyor Belt Group business units.

Sales within the Rubber Group rose to €3.85 billion in first quarter 2016, from last year’s €1.73 billion. Earnings (EBITDA) also rose from€709 million to €834 million year-on-year.

On the back of lower raw material costs, Continental has raised the Rubber Group’s adjusted EBIT margin forecast for full year 2016 from around 15.5 percent to more than 16 percent.

“We still expect a positive effect of about €100 million resulting from lower raw material costs for the Rubber Group in 2016,” said Continental.

The company has maintained its estimate for the average price of natural rubber (TSR 20) in 2016 at $1.50 per kilogram, and for butadiene, a base material for synthetic rubber, at $0.90 per kilogram.