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Continental AG aiming for annual sales of €25 billion

  30.10.2008    

Continental AG, Hanover, is aiming for sales of €25 billion for fiscal 2008 and will reduce net indebtedness as planned. On Thursday in Hanover, the international automotive supplier also confirmed its goal of an EBIT margin of about 8.5% as corrected on September 13. This margin figure is before the adjustment for amortization and depreciation resulting from the Siemens VDO purchase price allocation as well as restructuring and integra¬tion expense. The fourth quarter, however, holds uncertainties due to the declining economy. In response to the substantial deterioration in the market situation, the company has initiated an extensive cost-saving program in addition to ongoing restructuring projects.
"In the first half of the year, the weak market situation in North America was compensated by the favorable economic conditions in Europe and Asia. In the last quarter, however, there were drastic signs of slowing in all markets, whereby the dramatic declines in Europe in particular have negatively affected us. This trend will probably become even stronger, continuing far into 2009," said Continental Executive Board chairman Dr. Karl-Thomas Neumann.
"With its high efficiency and a strategy of continuous restructuring processes, Continental is well prepared for the difficult challenges ahead. Nonetheless, we have initiated additional programs to cut costs. For instance, in the Automotive Group we will reduce the number of temporary workers, greatly lengthen the plant holiday shutdown period at the end of the year by using the existing work time accounts, and, depending on the location and the order situa¬tion, deviate downwards from the 5-day-week until further notice. Furthermore, we are putting investments that are not urgent on hold," said Dr. Neumann.
Consolidated sales for the first nine months of 2008 rose by 60.6% to €19,146.0 million (Q1-Q3 2007: €11,920.5 million). This increase resulted both from organic growth and from changes in the scope of consolidation, especially from the acquisition of Siemens VDO. Ex¬change rate changes had an offsetting effect.
Consolidated EBIT before amortization of intangible assets from PPA and before depre¬ciation of tangible assets from PPA (only Siemens VDO) was up in the first nine months of 2008 compared with the same period of last year by €138.3 million, or 10.2%, to €1,494.9 million (Q1-Q3 2007: €1,356.6 million), and was equivalent to 7.8% (Q1-Q3 2007: 11.4%) of sales. Before special effects, it increased by €167.2 million or 11.9% to €1,569.6 million (Q1-Q3 2007: €1,402.4 million). The adjusted return on sales amounted to 8.2% (Q1-Q3 2007: 11.8%). EBIT was down €262.5 million on the previous year to €1,075.1 million, a decrease of 19.6% (Q1-Q3 2007: €1,337.6 million). The return on sales fell to 5.6% (Q1-Q3 2007: 11.2%).
Net income attributable to the shareholders of the parent was down 56.0% to €363.5 million (Q1-Q3 2007: €825.2 million), due mainly to the increased interest expense, with earnings per share lower at €2.24 (Q1-Q3 2007: €5.63).
The increase in raw material prices had a negative impact of approximately €205 million on the Corporation in the first nine months of 2008 compared with the prices for the first nine months of 2007. This affected primarily the Rubber Group.
Looking at the banking crisis, CFO Dr. Alan Hippe, vice chairman of the Executive Board and head of the Rubber Group, stressed the solid financial position of Continental. "As of  Sep¬tember 30, 2008, Continental had at its disposal liquidity reserves of nearly €1 billion as well as unused approved credit lines in volumes exceeding €2 billion."
 



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