Continental has issued a lower revenue forecast for 2008 and confirmed a revised margin goal. The company also reported a rise in its consolidated sales for the first nine months, which were boosted by the acquisition of Siemens VDO.
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In a statement issued today, Continental said it was is aiming for sales of EUR25bn for fiscal 2008. The supplier also confirmed its goal of an EBIT margin of about 8.5%, which was originally revised in September.
However the company warned: “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.”
Originally, Continental had estimated it would deliver sales of more than EUR26.4bn and an EBIT margin exceeding 9.3%.
Consolidated sales for the first nine months of 2008 rose 60.6% to EUR19,146m. The company said this increase resulted both from organic growth and from changes in the scope of consolidation, especially from the acquisition of Siemens VDO. Exchange rate changes had an offsetting effect.
EBIT was down EUR262.5m on the previous year to EUR1,075.1m, a decrease of 19.6%. The return on sales fell to 5.6%.
Net income attributable to the shareholders of the parent was down 56% to EUR363.5m, due mainly to the increased interest expense, with earnings per share lower at EUR2.24.
The increase in raw material prices had a negative impact of approximately EUR205m on the corporation in the first nine months of 2008 compared with the same period in 2007.
“In the first half of the year, the weak market situation in North America was compensated for by the favourable 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 chairman Karl-Thomas Neumann.
He added: “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 programmes 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 situation, deviate downwards from the five-day week until further notice. Furthermore, we are putting investments that are not urgent on hold.”
In the automotive sector, special effects including restructuring expenses in the interior division reduced earnings by more than EUR100m in the first nine months, compared with about EUR24m in the same period of 2007.
