Continental says despite weak growth in Russia coupled with political uncertainty, its relatively small volume there will not significantly impact financial performance.
Revealing preliminary fiscal 2014 figures, the supplier said it secured a company-wide margin exceeding 11% for its adjusted EBIT, despite what it describes as “pronounced weakness of Europe’s replacement tyre market in fourth quarter,” with sales increasing to EUR34.5bn (US$40.5bn), although conceding anaemic growth in Russia, Europe and South America.
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“Let me put this into relation,” a Continental spokesman told just-auto from Hanover. “Our overall sales volume in Russia as a corporation…is only 1% of the total corporation volume.
“What we do in Russia is mainly production in market for the market. What does that mean? We have a tyre plant – start of production was 2013 – the intention is to produce in Russia. The situation in Russia did not help in this regard.
“Market volume may be lower than expected. Regarding production of cars in Russia, yes of course, we have some slow-down – a little more drastic of -16% in 2014 as far as we can see it.
“It [market] is a little bit less than we expected, but this is nothing we have big worries about.”
Despite Russia’s woes, Continental expects the market to have reached more or less its bottom, although it is estimating a further contraction of 2%-3% could occur but “not another steep curve” downwards.
“What we can’t say is what the political repercussions will be in 2015 regarding Russia, but I can do the same with the Middle East,” said the Continental spokesman.
“Of course it is not going according to our plan and ideas, but it is nothing where we see a real danger.
The component manufacturer expects global production figures for passenger cars with a gross vehicle weight rating up to six metric tons to increase moderately this year, rising from around 87m to roughly 89m vehicles.
It is also aiming for sales growth of around 5% to a figure exceeding EUR36bn.
