Conti posts higher sales, earnings impacted by cost of raw materials

Hanover, Germany - Continental AG’s Rubber Group, which includes ContiTech AG and its Tire Division, has been impacted by higher costs of raw materials, despite a rise in sales in the first three quarters of the year.

The German corporation announced 9 Nov that, over the first nine months, sales within the rubber unit grew 9% to €13.0 billion compared to €11.9 billion in 2016.

The company is leaving its sales forecast for the Rubber Group at €17 billion for the year

Despite the positive effects of price increases for tires and industrial products, said CFO Wolfgang Schaefer, earnings (EBITDA) in the third quarter of 2017 dropped €100 million as a result of increased cost of raw materials.

This contributed to a 3% fall in earnings compared to €2.62 billion during the first nine months of the year in 2016.

Sales at the Tire division were up 6.0% year-on-year at €8,387.4 million in the first three quarters, while earnings (adjusted EBIT) fell 10.7% to €1,517.7 million.

ContiTech's sales were up 14.5% to €4,677.2 million in the first three quarters. Earnings (adjusted EBIT) fell 6.2% year-on-year to €381.2 million - though the EBIT figure came in 2.7% higher at €322.0 million.

Continental said it continued to estimate the negative effect of rising raw material prices for the Rubber Group in fiscal 2017 at €450 million, adding that the “recent development” of raw material prices would not take effect until fiscal 2018.

According to the Conti report, global demand for Continental replacement tires for passenger cars and light commercial vehicles rose by just under 3% during the reporting period as a result of a strong first quarter. For full year 2017, the company expects 2% increase.

In the medium and heavy replacement tire segment, demand rose 5% during the period under review. For full year 2017, Conti expects the equivalent figure to finish at 3% to 4%.