Continental on Monday said preliminary Q2 2009 figures show “a clear profit” with an adjusted EBIT of EUR283m despite further market-driven declines in sales in comparison to the same period of 2008.
Q1 2009 adjusted EBIT, was -EUR34.3m and reported Q2 EBIT of EUR38.8m passed the break-even point. Continental said it also “firmly complied with the financial covenants agreed upon with its creditor banks for the end of the second quarter”.
“In an extremely difficult business environment and despite the current paralysis due to its uncertain future, Continental still achieved its operating goals. The most extensive cost-cutting package in the company’s history, the management of accounts receivable from GM and Chrysler as well as the rigorous and consistent adaptation of the company to the continuing very difficult market environment in our business fields are showing increasing positive results,” said Continental executive board chairman Karl-Thomas Neumann.
He said Continental had reduced the number of employees worldwide by about 16,000 since the crisis began in September 2008.
“But despite a slight market upturn, for the time being there is no reason to give the all clear: In the second half of 2009 and beyond, the business environment will continue to be a major challenge for Continental as well as for the entire supplier industry. It would therefore be short sighted, in view of our tight financial situation, to rely solely on our operational strength, especially since the improved operating margins are generated based upon much lower sales.”
Consolidated sales for the first half of 2009 fell to EUR9,063.2m from EUR13,254.0m in H1 2008. This decline was due to the market downturn resulting in part from the unexpected stop in production at Chrysler in May and June.
Second quarter sales of EUR4,761.2m were ahead of Q1 sales by roughly EUR460m.
Neumann is examining whether it would make sense to merge with its more highly leveraged owner Schaeffler – itself essentially controlled by its banks – but German media reports have suggested the bearings maker wants to delay a merger until after the crisis in order not to lose influence.