HANNOVER, Germany—Continental AG continued its ``gratifying'' profit trend of the first half of 1996 as it saw consolidated pre-tax profits for the year's first nine months hit $83 million, a rise of 62 percent over what it earned during the same 1995 period. That income was affected, however, by an extraordinary expenditure of $53 million for the closure of a tire plant in Ireland.
Meanwhile, its North American unit, Continental General Tire (CGT) Inc., showed ``perceptibly improved'' results while coping with a shrink in volume. On a dollar basis, CGT's year-on-year sales dropped by 6.3 percent to $1.02 billion, from $1.05 billion for the same year-earlier period. But a strong dollar eased that drop to 2.5 percent in terms of deutschmarks.
According to Hanover-based Continental, CGT's passenger car tire division ``moved ahead'' in original equipment business, while its replacement tire segment ``suffered from a considerable drop in unit sales to a major customer; even a one-third increase in sales to independent tire dealers failed to compensate for this.''
Continental was referring to the huge loss of business CGT sustained last year when Sam's Club, the warehouse operation run by Wal-Mart Stores Inc., reduced its tire purchases from CGT by 2 million units. The tire maker will lose another 2.5 million units worth of sales from Sam's this year.
Even though ``a noticeable improvement in the result was achieved,'' the Conti report noted ``the passenger car division was still not able to break even.''
CGT's commercial vehicle tire division did not sell as many tires for trucks and earth movers as in the corresponding prior-year period due to some under-utilization of plant capacity. But Continental said the unit ``nevertheless improved on the 1995 result, which itself was already positive.''
Continental reported that all corporate groups bettered their prior-year results, even though they had to contend with some reductions in volume.
If a strong winter tire season continues to materialize, Continental said it expected fourth-quarter profits to match the strong performance level of last year.
In its November report to shareholders, Conti's executive board reminded them that last year the tire maker said ``the inner strength of the corporation and the progress accomplished make us confident of being able to achieve a sustained after-tax net annual rate of return amounting to at least 2.5 percent of sales.''
Taking due account of necessary restructuring expenditure, the board continued, ``we will come much closer to reaching this target in 1996.''
The company's consolidated sales for the first nine months rose by 2.6 percent to $5.22 billion from the 1995 period. Its ContiTech unit achieved a sales growth of 5.8 percent to $1.49 billion, up from the $1.41 billion it realized in the previous year.
Passenger tire sales for Continental posted a 2.3-percent increase to $1.96 billion from the year-earlier period's $1.91 billion, while commercial vehicle tire sales suffered a 7.1-percent drop to $0.53 billion.
For Conti's recently formed Automotive Systems Group, the first nine months of 1996 were successful. It said the manufacture and supply of complete wheel/tire assemblies to the automotive industry ``has developed gratifyingly.'' Assembly plants have been set up in Ghent, Belgium, for Volvo and in the Swabian town of Sindelfingen for Mercedes-Benz, and Conti said satel-lite operations are being estab-lished in France and Germany.
Cost-cutting measures under-taken by Continental will contin-ue, the company said. That de-spite criticism in Germany after it announced the relocation of half of its production capacity of 2 million passenger car tires from an Austrian tire plant and 2 million units from its Hannover-Stocken plant to lower-cost sites in the Czech Republic, Portugal and France.