Finance chief, Wolfgang Schaefer, told Reuters that Continental AG anticipates increasing raw material prices to ease in 2012 as the global demand for cars decline. After the automotive supplier reported third-quarter results last Thursday, Schaefer said that it’s possible that there will be a slight increase in automobile production next year but that it now expects “stagnation."
In the third quarter, the group had a 53% increase in its adjusted earnings before interest and taxes (EBIT) to 743.7 million euros ($1.0 billion). This is higher than the 713 million euro average estimate in a Reuters poll.
Continental confirmed that its outlook for the full year after its third-quarter earnings had beat consensus. The company had anticipated sales of at least 29.5 billion euros and an adjusted operating profit margin of around 10%.
Schaefer said that in the last couple of weeks, its synthetic rubber prices surged between July and October. Earlier, Continental said that it presently hoped to take a bigger hit from climbing prices for raw materials like synthetic rubber and rare earth this year. Last Thursday, the company said that for this year, it estimates that the burden from raw material costs is at over 900 million euros ($1.2 billion) this year.
In comparison, the previous outlook had been for around 850 million. Schaefer said that the price hikes have come into force this year and the market has accepted them well. Prices could be increased further by Continental if necessary. Last week, rival Michelin reaffirmed its full-year targets, despite having an uncertain truck tire market in the fourth quarter. It had reported a 10.6% increase in third-quarter sales. In Automotive News Europe’s list of the top 100 global suppliers, Continental ranks No. 3 with global original-equipment automotive parts sales of $24.8 billion in 2010. [source: Autonews]