HANNOVER, Germany—Continental General Tire, which improved its earnings 46 percent last year despite sales declines of replacement car and truck tires, experienced a ``particularly good start'' in the first quarter, said Bernd Frangenberg, president and CEO. Earnings before tax and interest improved to nearly $55 million (82 million marks), while overall sales revenue essentially was unchanged from a year ago, at $1.37 billion; sales reported in US dollars were 4.8 percent lower than in 1995, Conti said.
Conti General's passenger tire division was able to trim its losses last year but still fell shy of break-even, the company said. Efforts to improve the firm's independent dealer network and cost containment at the Mayfield, Ky., plant should help the firm get its car tire unit into the black, Conti wrote in its 1996 annual report.
Sales of tires in the aftermarket by independent dealers rose 26 percent last year, Mr. Frangenberg said, and have reached a level double that of three years ago. This increase offsets a halving of business the firm has with Sam's Club, as Sam's has moved to broaden the range of tire brands it offers.
Sales of Continental, General and other house brands represented 29 percent of Continental General's revenue last year, while private brands accounted for an additional 9 percent. OE car tires contributed 21 percent of Conti General's sales mix, with truck tires representing 23 percent and earthmover, farm and other products the remaining 17 percent.
Overseas, the economic recovery in most of Continental AG's markets should help the company achieve 5-percent growth in sales and a ``clear'' earnings increase this year, Conti Chairman Hubertus von GrÃ¼enberg forecast recently.
Conti anticipates sales of nearly $6.5 billion this year after recording 1.4-percent growth in the first quarter, to $1.48 billion. Pre-tax earnings climbed 17 percent, pushing the earnings/sales ratio to 3.5 percent.
With European car tire operations, Continental General Tire, and the ContiTech Holding non-tire division all now solidly in the black, Continental will focus on turning around the loss-making European truck tire and European retailing activities, Mr. von GrÃ¼enberg said.
The truck tire business suffered a pre-tax loss of $15.3 million last year as sales declined 8.3 percent and costs could not be contained. Sales continued to fall in the first quarter, leading Conti to initiate a benchmarking study of its European truck tire activities that likely will result in the consolidation of capacity at two main plants instead of three.
Conti's passenger tire operations in Europe improved earnings by a third last year, to $223 million, despite more than $15 million in losses by the company's retailing activities. The closure of the firm's Dublin, Ireland, car tire plant late last year resulted in $53 million in one-time expenses, which were applied to the net result.
The firm's ContiTech non-tire products division outperformed the various tire units, improving the bottom line ``measurably'' despite higher personnel costs and continued price competition; sales increased 6.2 percent to $1.98 billion.
Overall, Conti reported a 68.2-percent rise in operating earnings and a 24-percent increase in net profits last year to $129 million. This increased the firm's operating ratio to 3.1 percent and the net ratio to 1.9 percent, which still is short of the firm's declared goal of 2.5 percent. But Mr. von GrÃ¼enberg emphasized this is only the firm's intermediate target. ``Our vision is 5 percent,'' he said.