Conti eyes continued growth in '15

HANOVER, Germany (March 5, 2015) — Continental A.G. is projecting a 9-percent sales gain and an operating margin of at least 10.5 percent in fiscal 2015, building on the firm's solid financial results in fiscal 2014, the firm's top executives said March 5.

“Continental has had a good start into 2015, thus confirming our expectations for the entire year,” said Continental Chairman Elmar Degenhart, at the presentation of the preliminary business figures in Hanover. “We are pleased to look back at another extremely successful financial year 2014, during which we achieved our targets.”

Conti's adjusted pre-tax operating income for 2014 — adjusted for acquisition-related amortization and special effects — grew 3.7 percent to $5.13 billion on 3.5-percent higher sales of $45.8 billion, raising the adjusted operating margin slightly to 11.3 percent.

Net income jumped 23.5 percent to $3.15 billion.

Close to half of the firm's sales growth in 2015, or roughly $1.7 billion, will come from the inclusion of revenue from Veyance Technologies, the former Goodyear engineered products business that Conti bought for $1.58 billion.

“When evaluating the results, we should not overlook the fact that there was, in some cases, very weak growth in Europe, Russia, and South America,” Mr. Degenhart said, along with “significant” exchange rate fluctuations.

“In addition, the mild winter at the end of 2014 had a negative impact on the winter tire business in Europe,” he said. “The driving force behind the sales development once again came from China and North America. In light of this, it is remarkable that profit after taxes of just under $3.2 billion…could be achieved.”

Conti's tire division reported fiscal 2014 operating earnings rose 6 percent to $2.43 billion on 2.1-percent higher sales of $13 billion, raising the operating margin a half point to 18.7 percent.

The company said its tire business sold 128 million car and light truck tires in 2014, with high-performance and winter tires accounting for 46 percent of the total, up from 44 percent in 2012 and 39 percent in 2010.

Overall, Conti devoted $2.72 billion, or 5.9 percent of sales, to capital expenditures and $2.84 billion, or 6.2 percent of sales, to research and development. Capital spending was up 3.2 percent while R&D expenditures climbed 13.8 percent.

Employment during the year grew about 6 percent to 190,000 at year-end.