HANOVER, Germany (April 8, 2003) — Continental A.G. expects earnings in fiscal 2003 to be on par with 2002 despite an economy that management describes as unpredictable and uncertain.
Continental reported $655 million in operating earnings last year — a record figure despite a background of uncertainty about the economic situation in the automotive business. On a net basis, Continental turned a loss in 2001 into earnings of $213.2 million last year, while sales rose slightly to $10.8 billion.
Continental's earnings gains were aided by returns to profitability by the passenger and commercial vehicle tire units and despite continued losses by Continental Tire North America Inc.
Conti didn´t elaborate on its performance in North America, other than to say passenger tire volumes in the U.S. and Mexico fell short of expectations, while growth in replacement commercial vehicle tires more than compensated for a decline in original equipment deliveries.
Earlier, the company said the “unsatisfactory” tire business earnings in North America would force it to amortize Conti Tire´s remaining goodwill of $47 million.
A report by Morgan Stanley Equity Research in November stated the North American unit´s loss was $27.4 million for the third quarter and $80.4 million for the nine months. The loss included costs of $19.6 million related to the firm´s recall of 595,000 tires early in 2002.
Conti's passenger tire unit reported earnings before tax and interest of $174.2 million on 6-percent lower sales of $3.56 billion. The lower sales reflect the disposal of the National Tyre Service retail chain in Great Britain, a drop in the euro-dollar exchange rate and the weak North American replacement business, Conti said.
The company said its OE shipments were up 5 percent over 2001, boosting its market share.
Pre-tax earnings for the commercial vehicle tire sector hit $87.6 million on sales of $1.24 billion.