German car part supplier Continental AG has decided to propose a dividend payment of EUR1.50 per share, after posting a profit in the last fiscal year. The company, which is still preparing its financial statements for fiscal 2011, will propose the dividend payment at its annual shareholders’ meeting scheduled for April 27, 2012.
The EUR1.50 per share dividend is almost three times higher than the average estimate of EUR0.55 a share from 23 analysts surveyed by Bloomberg News. Continental is expected to more than double its net income in 2011 to EUR1.25 billion from EUR576 million in 2010.
According to the company, the proposed amount to be distributed totals roughly EUR300 million, based on the approximately 200 million shares outstanding.
Henning Cosman, an analyst at WestLB, said that the proposed dividend payment is a “very positive signal” of the Continental confidence and ability to generate cash in 2012, given that the company will implement capital expenditure plans of six percent of sales and deleveraging this year.
Continental posted increasing earnings and revenue in 2011, thanks to growing demand for cars in China and the United States. In 2012, the car parts supplier expects the global car industry to sell between 75 million to 78 million vehicles. Continental currently ranks third on the Automotive News Europe list of the top 100 global suppliers, after selling $24.82 billion worth of auto parts in 2010.