HANOVER, Germany (Nov. 3, 2010) — Continental A.G. is raising its earnings outlook for fiscal 2010 after posting a third quarter gain in pre-tax operating of nearly 80 percent.
For the quarter ended Sept. 30, Continental posted earnings before interest, taxes and amortization of $1.1 billion on a 21-percent rise in sales to $10.2 billion. Net income of nearly $19 million was in contrast to a billion-dollar-plus loss a year ago.
For the year, Conti is raising its pre-tax earnings ratio projection to about 9 percent from a range of 8 to 8.5 percent.
Conti's Rubber Group posted solid gains in third quarter pre-tax operating earnings on 21-percent higher sales in the quarter despite record burdens from continued rising raw materials costs. The passenger tire/light truck (P/LT) tire division reported operating income of $266 million on 17.6-percent higher sales of $2.05 billion, while the commercial Tire Business Staff Reported earnings of $63.4 million on 36-percent higher sales of $550 million.
“That is a great achievement, and is very deserving of respect,” said Conti CFO Wolfgang Schäfer. “The impact from the increase in raw material costs will however exceed ($630 million) for the Rubber Group for the entire year 2010. In the remaining months of this year, it will be possible to only partially offset this impact with mix improvements, increases in efficiency and the price increases that have already been announced.”
In the P/LT division, year-on-year sales volumes in all regions and business units saw strong double-digit percentage growth in the first nine months of 2010, with the most significant increase being reported by the OE business unit.
Volume growth in the replacement business was strong across all regions, with sales figures reflecting the revival of the individual markets.
P/LT division sales for the nine months rose 26.2 percent to $5.93 billion, but restructuring-related expenses and severance payments of more than $26 million—related to the closings of a tire plant in Clairoix, France, and compounding activities in Traiskirchen, Austria—affected earnings.
CV division sales rose 33.5 percent to $1.43 billion for the nine months of 2010.