Continental AG Keeps Forecast as Third-Quarter Earnings Jump

Continental AG (CON), Europe’s second- biggest car-parts maker, stuck to its full-year sales forecast as third-quarter profit surged 74 percent.

Earnings before interest and taxes climbed to 635.7 million euros ($869 million) from 365.1 million euros a year earlier, Hanover, Germany-based Continental said today in a statement. Sales rose 19 percent to 7.71 billion euros.

Continental reiterated a forecast published in July that sales in 2011 will total 29.5 billion euros or more. Volkswagen AG, the region’s largest carmaker, said on Oct. 27 that revenue will be “significantly higher” in 2011. Industrywide U.S. car sales in October rose at the fastest pace since February, according to Autodata Corp. figures.

“More than half our portfolio is in the fastest-growing segments in the automotive industry,” Chief Financial Officer Wolfgang Schaefer said in a telephone interview, adding that he expected stable market development in 2012, with declines in Europe made up for by growth in Asia, Russia and Brazil.

Continental, whose biggest shareholder is German roller- bearing maker Schaeffler Group, fell as much as 5.7 percent to 49.81 euros and was down 0.3 percent at 10:29 a.m. in Frankfurt.

“The numbers look good, in line with expectation, but I think the shares had a strong run over the last weeks and today is just correcting the levels that we see,” said Jose Asumendi, a London-based analyst at Royal Bank of Scotland Group Plc who recommends buying Continental shares.

Margin Forecast

The Ebit margin, adjusted for amortization and one-time gains or costs, will amount to about 10 percent of revenue this year, Continental said. The nine-month margin on that basis was 9.9 percent.

Nine-month net income more than doubled to 893.7 million euros from 363 million euros a year earlier, propelled by a 149- fold jump in third-quarter profit resulting from the release of provisions. Chief Executive Elmar Degenhart said in the statement that the company still has “strong order books.”

Schaefer said he sees “nothing in the next six weeks which could jeopardize our target.” He declined to state any forecast for 2012. Price increases should offset rising raw materials costs, and cooperation with Schaeffler is already contributing to both sales and earnings, he said.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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