Conti's rubber group remains cash-generative

ERJ staff report (DS)

Hanover, Germany -- Strong profitability at Conti's rubber group did not prevent the group as a whole reporting a loss (EBIT) in the first half of the year. The rubber group saw earnings fall by roughly one quarter in the three months to 30 June 2009. Overall, it appears that -- outside the heavy truck sector -- the worst period may now over, though significant challenges remain.

In Conti's light truck division, sales for the three months were down by 16.1 percent (or 16.0 percent on a like-for-like basis), while sales for the six month period were down by 16.6 percent to €2,115.2 million, compared with the same period of 2008 (H1 2008: €2,535.8 million). On a like-for-like basis, sales for the most recent six months fell dropped by 15.8%.

The Passenger and Light Truck Tires division's adjusted EBIT was down in the first six months of 2009 compared with the same period of 2008 by €28.6 million, or 8.8%, to €296.6 million (H1 2008: €325.2 million), equivalent to 14.1% (H1 2008: 12.8%) of adjusted sales.

The replacement business in Europe and Asia posted volume losses in the first half of 2009 compared with the same period of 2008 at a level similar to the market declines. In contrast to the market trend, the replacement business in The Americas region was able to achieve volume increases in the first six months of 2009 compared with the same period of 2008. Sales volumes in the original equipment sector fell on a global basis compared with the figures for the first six months of 2008, with decreases in the NAFTA region being greater than in Europe. The declines correlated to the reductions in vehicle production.

Sales in the heavy truck unit show no signs of recovery, with the fall standing at 30.3 percent in the first six months, made worse by a 32.8 percent in the most recent quarter. On a like-for-like basis, Conti said sales fell by 33.4 percent in the second quarter, compared with 27.1 percent in the first quarter.

This pushed the CV division into a loss for the first half, but restructuring measures allowed the unit to break even (EBIT) in the second quarter.

Conti said The global economic crisis with its extreme market downturns in all regions pushed sales figures below the previous year's level. In Europe, the figures for the replacement business as well as for the original equipment business were down substantially on last year's figures. In Asia we also posted declines in sales. In The Americas region, sales figures for the original equipment business remained well below the previous year's level, whereby in the replacement business sales fell just short of the previous year's level, thanks particularly to the good development in South America.

At ContiTech, Like-for-like sales were down by 27.3 percent in the second quarter, compared with a figure of 26.3 percent in the first quarter.

The company said Sales of the ContiTech division fell by 29.1% to €1,157.0 million in the first half of 2009 compared with the same period in 2008 (H1 2008: €1,630.9 million). Before changes in the scope of consolidation and exchange rate effects, sales dropped by 26.8%, primarily as a result of volume decreases caused by the global economic crisis. With a 37.6% drop in sales, the automotive OE operations in particular contributed to this decline. Sales in the industrial sector fell 19.2%. In contrast, sales on the automotive replacement market were up 1.2%.

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Press release from Continental