HANOVER, Germany (April 10, 2003) — Continental Tire North America Inc. fell $103 million into the red on an operating basis last year and likely won't be back to break even before fiscal 2005, Continental A.G. officials said recently.
The company, which generates about $1.5 billion in sales annually, reportedly will be $100 million in the red again this year, according to a report by financial market analysts Morgan Stanley International & Co. Ltd. The firm said Conti management expects to effect a turnaround through cost reductions and improved brand management, including a greater emphasis on the Continental brand.
2002 marks the second consecutive year in the red for Continental Tire North America (CTNA) Inc.; it reported a $297.2 million operating loss in 2001 after taking a $182 million charge to cover a factory closing in Mexico and other measures.
At a fiscal 2002 earnings press conference in Hanover, company officials said management is evaluating its options regarding restructuring and cost cutting, but ruled out plant closings as an option.
In its report, Morgan Stanley said Conti will need to invest to restore its brand image and revitalize its dealer network, but that these spending needs must be measured against difficult U.S. market conditions.
“The bottom line here is that there is no quick fix for North America and it is likely to remain a concern for some time.”
Continental recently changed the top executive at CTNA, naming Martien de Louw president and CEO, replacing Ulrich Wellen after only about a year of having Mr. Wellen at the helm.