Continental AG reported a 34.5% rise in first-quarter operating earnings and said it could beat its 2004 profit guidance if the economic upswing continues.

Reuters noted that Continental recently launched a €227 million- bid for rubber and plastic parts maker Phoenix AG, which will be integrated into its ContiTech division to create a unit with annual revenues of roughly €2.9 billion.

The report said the world’s fourth largest tyre maker beat market expectations with first-quarter earnings before interest and taxes of €246.7 million and reaffirmed a full-year goal to raise sales and operating profit before special items – it said it could top this goal if the economy improved further.

The biggest earnings driver reportedly was the firm’s automotive systems division, which reported a 40.7% rise in operating profit to €115.2 million.

Group net profit rose 48.2% to €129.5 million, while revenues climbed 5.8% to €2.986 billion, Reuters said.