Conti reports record sales, profits for 2005, breaks even in N America tyre unit

Frankfurt, Germany - Continental AG has reported record sales and profits for the twelve months to December 2005. This, according to a corporate statement, "despite a generally subdued global automobile market and considerably higher raw material prices."

The company said consolidated sales rose by 9.8 percent to Euro 13 840 million (2004: Euro 12 600 million). When adjusted for exchange rate effects and from effects of consolidation, said Conti, this represents a rise of 3.7 percent over last year results.

Perhaps more spectacular, given the difficult business environment, was an operating margin (before interest and tax) of 10.9 percent. Ebit earnings amounted to Euro 1507 million, up 30.2 percent from the Euro 1157 recorded a year ago.

In its annual results statement, the company said, "the passenger and light truck tire division increased sales by 8.3 percent to Euro 4445 million (2004: Euro 4104 million). Adjusted for changes in the scope of consolidation and exchange rate effects, sales increased by 3.8 percent. Operating result (EBIT) of the division surged by 57.5 percent to Euro 669.0 million (2004: Euro 424.8 million). This implies a return on sales of 15.1 percent (prior year: 10.4 percent). Adjusted for scope of consolidation and one-time effects operating result rose in 2005 by Euro 96.5 million.

"The division increased its sales by 3.9 percent to 106.2 million tyres. Operational sales were on prior year's level. Business in the NAFTA region developed positively overall. All told, in the fourth quarter of 2005 we still almost reached the operating break-even point we were aspiring to, said Continental Tire of North America (CTNA) President, CFO Dr. Alan Hippe. We expect that during this year more progress will be achieved and we can stabilise this positive trend. More efficient cost structures will help, as will the new plant in Brazil, where production has started."

The implication is that selling prices of tyres rose by around 2.2 percent to an average Euro 41.04/tyre in the division, up from Euro 40.15 a year earlier.

In commercial tyres, the company said the division "showed a sales decline of 8.1 percent to Euro 1379 million (2004: Euro 1501 million). Adjusted for changes in the scope of consolidation and exchange rate effects, however, sales increased by 6.2 percent. The division improved its operating result (EBIT) by 47.1 percent to Euro 153.0 million (2004: Euro 104.0 million), achieving a return on sales of 11.1 percent (2004: 6.9 percent). Global truck tyre sales rose by 1.7 percent to 6.7 million parts," said Conti.

This implies a small increase in the selling price of tyres, to an average Euro 229.4 each, from Euro 227.8 a year ago.

The business units commercial vehicle tyres Europe and North America achieved sales rises over the previous year. In Europe original equipment sales rose by 14.6 percent; in the replacement business sales figures were below those of the previous year by 4.3 percent, despite a slight gain in market share. In North America the original equipment business grew by 9.9 percent, while replacement business declined by 0.9 percent, explained the Executive Board member responsible for the division, Dr. Hans-Joachim Nikolin.

Conti said the ContiTech division, "increased its sales by 40.3 percent to Euro 2.894 million (2004: Euro 2.063 million). Phoenix contributed Euro 985.3 million to sales. Adjusted for changes in the scope of consolidation and exchange rate effects, sales increased by 2.4 percent. In particular the business units air spring systems, power transmission group and conveyor belt group contributed to this sales growth”, in the words of the executive board member responsible for the division Gerhard Lerch.

He referred especially to the successful integration of Phoenix AG, acquired in 2004: We have moved forward considerably in this respect and are ahead of schedule. Positive effects have already become apparent and will increase this year. The operating result (EBIT) of the ContiTech division rose by 6.2 percent to Euro 160.4 million (2004: Euro 151.0 million), achieving a return on sales of 5.5 percent (2004: 7.3 percent). Adjusted for scope of consolidation and one-time effects the operating result rose by Euro 26.6 million over the prior year."

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Source1 (Origin) story

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