Conti posts Euro 1123 million loss in '08, will continue cost cutting

ERJ staff report (TB)

Tire Business staff report

Hanover, Germany -- Continental AG said it will increase cost-cutting measures this year after posting a net loss of Euro 1123.5 million in 2008 compared with a profit of euro 1021 million in 2007. The company reported an operating (EBIT) loss of euro 296 million, reversing the profit of 1676 million a year ago.In the rubber goup,

The company's rubber division fared better, reporting slightly reduced operating profit of euro 984.9 million, down from euro 1226 million a year ago, on level sales. Sales in the 12 months to December 2008 were euro 9354 compared with euro 9337 in 2007.

The company did not publish figures for the fourth quarter alone, but subtracting the nine-month results from the full year shows that both sales and profits declined in the final quarter, net sales for the final three months amounted to euro 2171 million, compared with euro 2419 million, while operating result (EBITDA) fell more steeply, to euro 312 million, from euro 463.5 million. THis is substantially better than the performance of other tyre companies whch have reported recently.

CFO Alan Hippe said the company's rubber and tyre group's operating result was “outstanding” in light of difficult economic condition.

Conti's automotive group achieved sales of euro 14 900 million.

“The start into the first quarter of 2009 shows just how great the current year's challenges will be,” said Conti CEO Karl-Thomas Neumann. “The slump in sales, particularly in the automotive divisions, is likely to accelerate in the first half of 2009.”

Conti didn't specify where it will cut costs but noted it reduced its work force to 139,155 after laying off 12,499. Contracts with some 5,000 temporary workers were not extended.

The company also said it is in “constructive talks” with its controlling shareholder, Schaeffler group, to find ways the companies can cooperate.

“Beyond having to combat a severe industry downturn while paying off 10 billion euros in net debt,” Conti said it “has to compensate for the departure of top management following a leveraged bid by Schaeffler,” a privately held firm owned by billionaire Maria-Elisabeth Schaeffler and her son Georg.

Conti added that Schaeffler is seeking a German government bailout “and over the longer term says it plans to raise fresh capital from an investor when it can find one.”

From Tire Business (A Crain publication)

press release from Conti