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Continental Expects 2012 Margin to Exceed Good Previous Year Level after Successful First Half-Year
- Automotive supplier lifts sales target to more than €32.5 billion
- Consolidated sales at €16.5 billion after six months
- Adjusted EBIT reaches €1.8 billion / 11.1% margin
- Investments for future growth intensified substantially
In the second quarter, the Continental Corporation nearly matched the dynamic level of the strong first quarter and sees itself on track for another record year. "Based on the successful first half of the year, we are confident that we will comfortably achieve the goals we have set for the year. Nonetheless, we must continue to keep a close eye on the uncertainties on the global sales markets, the difficult economic situation in some European Union member states and the slowdown in global economic growth," said Continental Executive Board Chairman Dr. Elmar Degenhart on Thursday in Hanover.
"As a result of the good development in the first half of the year, we now anticipate an increase in consolidated sales of more than 7% to over €32.5 billion. In addition, we assume that the adjusted EBIT margin will even top the very good level achieved in 2011. The reason for this reassessment is the slightly lower negative impact from raw material costs, which had recently increased heavily," Degenhart explained. "Despite record investments of some €2 billion, the goal for the free cash flow remains unchanged at more than €600 million."
In the first six months of 2012, the international automotive supplier increased its sales 10.9% year-on-year to €16.5 billion. At the same time, EBIT rose almost 26% to €1.6 billion, with an EBIT margin of 9.7%, against 8.6% a year ago. The corporation's adjusted EBIT, adjusted particularly for acquisition-related amortization and special effects, rose to more than €1.8 billion, up from just under €1.5 billion. The adjusted EBIT margin is 11.1% after 10.0% a year ago.
In the first half of 2012, the net income attributable to the shareholders of the parent rose nearly 47% year-on-year to €1 billion, corresponding to earnings per share of €5.02 after €3.42 one year ago.
Despite a dividend payment volume of €300 million and substantially higher investments, the Continental Corporation reduced its net indebtedness year-on-year by €238 million. It was slightly higher than at the end of 2011, rising by just under €104 million. "Compared with June 30, 2011, we improved our equity by almost €1.5 billion to a good €8.3 billion and upped the equity ratio to more than 30% once again. This was not the least reason that our gearing ratio improved to nearly 83% despite the slight increase in net indebtedness as a result of seasonal factors. The ratio was still 104% a year ago and 85% at the end of the first quarter," explained CFO Wolfgang Schäfer. "We also improved our free cash flow by nearly €90 million to €126 million in the first half of the year compared to the first six months of 2011."
The international automotive supplier spent almost €830 million on investments in the first half of 2012, which is €210 million more than in the same period of last year. "We are thus fulfilling our promise to reduce our indebtedness while at the same time paying dividends once again and investing substantially in our profitable growth," Schäfer stressed. The capital expenditure ratio rose accordingly from 4.2% to 5.0%. In the Rubber Group, it was as much as 6.7%, with the announced additional expenditures for capacity expansion in the Tire Division making a major contribution to this development.
As previously announced, Continental again created new jobs in the second quarter. The company's workforce now totals nearly 169,000, which is 9,700 more than a year ago and 5,000 more than at the beginning of the year. In Germany there were some 49,300 employees at the end of June 2012, 700 more than a year ago.
Continental's Executive Board Chairman emphasized that, for the first time, the Automotive Group posted half-year sales over €10 billion, after a good €9 billion a year ago. "At the same time, we slightly improved our adjusted EBIT margin, which amounted to 8.1% after 8.0% a year ago," said Degenhart.
The Rubber Group recorded sales of a good €6.5 billion, which is another new half-year record. "The adjusted EBIT margin of 16.5% benefited from the recent fall in raw material costs. But in view of the fact that price increases must be anticipated again in the future, this level cannot be the benchmark in the long term," Degenhart concluded.
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