Continental raised its full-year sales forecast

Article by Christian Andrei, on July 28, 2011

Continental AG on Friday raised its forecast for its whole-year sales to 29.5 billion euros ($42.36 billion) from a previous estimate of 28.5 billion euros, thanks to price increases that contributed to the offsetting of a sharp increase in raw material costs.

The German tire and auto parts manufacturer also expects an adjusted operating profit margin of around 10 percent.

Chief Executive Officer Elmar Degenhart disclosed that currently, they do not see any reason why the good development in earnings should be weaker in the second half of 2011 compared to the first half.

The company’s competitor, Michelin, also increased its sales forecast on Friday, stating that the price increases were offsetting higher prices of raw materials. Michelin also estimates that the rise in raw material prices will cost it around 1.8 billion euros this year.

Continental disclosed that now, it is expecting its tires business to incur raw material costs of 850 million euros this year versus the previous estimate of 700 million because of the increase in synthetic rubber prices after the March 11 disaster in Japan.

The company stated that this will result to an additional burden for the ContiTech and the Passenger and Light Truck Tires divisions in the second half of the year.

Also, the company mentioned that the average price of butadiene, which is a major industrial chemical utilized to create synthetic rubber, increased more than 70 percent from the second quarter last year.

Topics: continental, sales

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