Continental said rising rubber prices will hit earnings after it posted a 62% rise in first quarter net profit on the back of surging emerging markets demand.
The Hanover, Germany-based supplier of auto parts and tyres on Thursday said its first-quarter net profit rose to EUR368m (US$547m) but warned that raw material costs have not fully filtered through to the bottom line.
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“The burden will increase in the second quarter,” CFO Wolfgang Schaefer said in an interview with Reuters.
In the first quarter, rising raw material prices dampened profits by EUR257m.
For the full year, higher costs – of natural rubber in particular – are expected to dent profits by over EUR700m, Schaefer said, adding that the company is considering additional price increases for customers following two price hikes this year.
The price of natural rubber has risen from $3.45/kg last year to an average price of $5.30 between January and April, Schaefer said.
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By GlobalDataNet debt rose to EUR7.6bn, from EUR7.3bn at the end of December, to fund a seasonal increase in production of summer tyres.
It added it aims to generate at least EUR500m of free cash flow and reduce net debt to less than EUR7bn by the end of the year.
