Continental Continues to Gain Strength

(PresseBox) (Hanover/Frankfurt/Main, ) .
- Profits increase to almost €1.9 billion / Proposed dividend of €2.25
- Net indebtedness down by almost €1.5 billion in 2012
- Gearing ratio falls to 58% / Medium-term goal achieved ahead of time
- Sales up 7.3% to €32.7 billion / EBIT exceeds €3 billion / Margin of 9.4%
- Adjusted EBIT of €3.5 billion/Margin of 10.8%
- Outlook for 2013: Sales up by more than 5% to over €34 billion


In 2012, the Continental Corporation set new records in a market environment that was difficult in part. In so doing, it achieved its goals for main key financial performance indicators ahead of schedule. This success is set to continue in 2013: Despite muted market prospects, the international automotive supplier is aiming to boost sales 5% to more than €34 billion this year. The adjusted margin is to remain above 10%.

"In 2012, Continental increased profits to just short of €1.9 billion, topping the previous year's level by more than 50%. At €9.42, we have very nearly double-digit earnings per share. What is more, we cut our net indebtedness by close to €1.5 billion, bringing it down to a reasonable level," said Continental's CEO Dr. Elmar Degenhart at the Annual Financial Press Conference in Frankfurt/Main on Thursday. "At the same time, we have utilized our greater flexibility and given our future growth a good shot in the arm with higher spending on investments and R&D."

"At the Annual Shareholders' Meeting on May 15, 2013, the Executive Board will propose payment of a dividend in the amount of €2.25 per share. That corresponds to a dividend payment ratio of around 24% relative to the net income attributable to the shareholders of the parent," said Degenhart. "In addition to the dividend, our shareholders profit from the extremely positive performance of our stock price, which rose 82% in fiscal 2012. Our stock thus enjoyed the strongest price growth among DAX companies."

The Continental Corporation increased sales by 7.3% in 2012 to €32.7 billion. Once again, EBIT was exceptional, growing 18.3% to almost €3.1 billion. The EBIT margin amounted to 9.4%, after 8.5% in fiscal 2011.

Adjusted EBIT - in particular for acquisition-related amortization and special effects - rose by nearly 16% to €3.5 billion. The adjusted EBIT margin was 10.8%, after 10.0% one year previously.

At the end of 2012, net indebtedness amounted to €5.3 billion, well below the targeted level of less than €6.5 billion. "Thanks to a very positive development in uncommitted funds, we undercut our indebtedness target by more than a billion euros. As a result, the gearing ratio fell to 58.2%, which was below our medium-range target of 60%. In 2013 we intend to further reduce our net indebtedness and keep the gearing ratio below 60% despite the negative effects of changes in accounting regulations," Degenhart announced. "With an equity ratio of 33.5% at the end of 2012, we also achieved our medium-term target of between 30% and 35% ahead of schedule. Despite the negative effects that the accounting changes will have here as well, we intend to finish 2013 with an equity ratio above 32%."

CFO Wolfgang Schäfer noted that Continental had had an unusually strong free cash flow in 2012: "At more than €1.6 billion, free cash flow was significantly higher than we had anticipated. This is the result of solid net earnings and successful efforts to reduce our working capital ratio relative to sales. Comparatively quiet business in December was likewise of help here, translating into fewer customer receivables for that month. In addition, more customer receivables than expected were reduced in that same month," explained Schäfer. "Operating receivables declined by around €360 million against the previous year. Working capital was down by over €560 million. In the current year we hope to generate a free cash flow of more than €700 million."

"Our sound figures and our company's stable financing basis are also paying off in terms of interest expenses, which fell by almost €100 million to just around €564 million in 2012. By comparison, in 2009 and 2010 they exceeded €760 million each year," said Schäfer. "We are keeping an eye on the option of redeeming ahead of schedule one or even several of the bonds maturing in 2015 or later. This would be possible from the latter half of 2013 onwards. With the credit markets as they are today, such a move would further reduce interest expenses in future years."

The number of employee also reflects the company's positive performance. The workforce increased by 5,850 to around 170,000 as of the end of 2012.

At significantly more than €1.7 billion, expenses for research and development were again roughly 10% higher than the previous year's figure. "In the Automotive Group alone, we spent nearly 8% of sales on research and development, allowing us to top the industry average. In 2013, we intend to maintain this level, which is essential if we are to bolster our future viability," said Degenhart. "In 2012 we also invested more than €2 billion in property, plant and equipment and software, thereby programming our company for further growth. The capital expenditure ratio was a hefty 6.2%. In the current year, we shall very much maintain this level of growth plan implementation. We shall, at the same time, keep a close watch on market developments."

"Overall, we want to use the strong financial basis achieved early in 2012 to expand our position as one of the leading automotive suppliers, tire manufacturers and industry partners. With a record-setting €25 billion in incoming customer orders in 2012, the Automotive Group provided clear evidence of the growing trust customers place in us. For this reason, we look both to this year and the years beyond with confidence," said Degenhart.

Kontakt

Continental Reifen Deutschland GmbH
Büttner Straße 25
D-30165 Hannover
Dr. Felix Gress
Continental AG
Senior Vice President of Corporate Communications
E-Mail:
Hannes Boekhoff
Continental AG
Vice President for Media Relations
E-Mail:

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