Continental has reported strong profit and sales growth for its third quarter, and announced a 10% increase in capital to help finance its purchase of Siemens VDO.
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Earnings before tax and interest (EBIT) rose 8.1% to EUR426.1m and turnover was up 5.2% to EUR3.9bn. According to dpa-AFX, profits were below analysts’ expectations of an increase of around 10%. Turnover was, however, in line with expectations.
Continental said it would issue 14.65m new shares. “With this move, we are pursuing several goals at the same time: We are ensuring speedy and consistent implementation of our financing concept for the acquisition of Siemens VDO. Additionally, by taking this step quickly and resolutely, we are removing any speculation about the timing and scope of the capital increase, which is naturally in the interest of our medium and long-term oriented investors”, said chairman Manfred Wennemer.
“In particular, however, we want to give investors a fair opportunity to evaluate the current performance strength of Continental based on our latest quarterly figures as well as the future prospects resulting from the acquisition of Siemens VDO.”
The banks involved in executing the capital increase include Citigroup Global Markets, Dresdner Kleinwort and Goldman Sachs. Continental is being advised by ABN AMRO Rothschild on this transaction.
On 25 July 25 Continental announced that it would acquire Siemens VDO Automotive for EUR11.4bn. The transaction is expected to be completed by the end of this year.
Recently, the supplier successfully raised EUR13.5bn for long-term financing of the acquisition.
Continental’s chief financial officer Alan Hippe said the fourth quarter is going well and meeting expectations. He had particularly good hopes for the tyre division which is benefiting from high demand for winter tyres.
Hippe added that the integration of Motorola’s automotive electronics division acquired by Continental last year is also going well.
