HANOVER, Germany—One year after acquiring the brake and chassis components business of ITT Teves, Continental A.G. is on the lookout for further acquisition candidates to help it round out its new identity as a "total chassis management" supplier. While it is not currently engaged in any negotiations, Conti is confident it has sufficient financing to allow it to move quickly if and when a suitable deal presents itself, Chairman Stephan Kessel said in connection with the release of the company's nine-month results.
Among the candidates Mr. Kessel mentioned as businesses that would complement Conti's activities well were Pirelli S.p.A.'s tire business and the chassis systems maker Mannesmann Automotive.
Above all else, though, Mr. Kessel said, Continental needs capacity in steering and suspension systems—especially in electronic steering and adaptive damping—to complement the brake and chassis systems activities of its Continental Teves, and move into what it calls total chassis management.
Mr. Kessel's mention of Pirelli is meant as a friendly gesture to Pirelli management to not dismiss the possibility of working together with Continental, a company spokesman said. Both Conti and Pirelli emphasized that they are not engaged in any talks at this time.
As for Conti's financial performance, solid operating results from all its business units combined for a positive earnings report for the nine months ended Sept. 30.
Of Conti's five main business units, only Continental General Tire Inc. showed a decline in profits in 1999 from the 1998 period, primarily due to the effects of the prolonged strike at its Charlotte, N.C., plant.
On a corporate basis, Conti reported 40-percent growth in pre-tax operating earnings to $414 million and a 57.1-percent increase in sales to $7.21 billion. Without the first time inclusion of results of its Continental Teves brakes and chassis components business, sales would have risen 4.5 percent, Conti reported.
For fiscal 1999, Continental expects sales to reach nearly $9.7 billion and earnings growth to keep pace with their progress through the nine months.
Conti General's operating earnings slipped 3.9 percent to $52.7 million while sales grew 17 percent to $1.16 billion. Conti calculated it cost nearly $13 million to conclude the strike, which ended Sept. 19.
The sales growth was due primarily to the inclusion of the former Hulera Euzkadi operations in Mexico—now called General Tire Mexico— Conti said. In passenger tires, Conti General made "solid" gains in original equipment business, whereas replacement sales were down slightly because of product shortages caused by the strike, the company said.
Conti's European passenger tire business rose 9.3 percent to $1.96 billion, while operating earnings increased 4.8 percent to $188.2 million. Sales by the commercial tire group jumped 23.1 percent to $687.1 million while earnings were up 30 percent to $42 million.
ContiTech, the non-tire rubber and plastics products activities, reported a 28-percent gain in operating earnings, to $108.6 million, on 0.9-percent growth in sales, to $1.39 billion. Continental Automotive Systems' sales exceeded $2 billion, largely due to the inclusion of Continental Teves.