HANOVER, Germany (Aug. 3, 2006) — Continental A.G. reported improved earnings in the six months ended June 30 despite increases in raw materials costs and the “restrained” global automotive industry.
Conti's pre-tax operating earnings improved 17.1 percent, to $886.8 million, while sales rose 6.2 percent to $8.88 billion, resulting in a return on sales of 10 percent.
Conti's car/light truck and truck tire divisions both suffered earnings declines during the period as the cost of raw materials—particularly natural rubber and oil—increased by nearly $195 million over the comparable 2005 period, Conti said. The firm's earnings also were affected by $56 million in charges set aside to cover the costs of closing the Charlotte, N.C., tire plant.
The car/light truck division's operating income fell 14.4 percent to $260.4 million, while sales rose 7.8 percent to $3.48 billion, dropping the margin two and half points to 9.4 percent.
The truck tire division's earnings fell 6.1 percent to $54 million as sales grew 7.8 percent to $882.2 million, resulting in a margin of 6.1 percent.
Looking ahead, Conti Chairman Manfred Wennemer said, “We see these first-half results as especially encouraging for our forecast of topping last year's sales and earnings. In the light of this performance we have no cause to revise our outlook for fiscal year 2006—even though competitors operating in parts of our business have been forced to do so.”