Continental Plans First Dividend in 4 Years

Continental AG (CON), Europe’s second- biggest car-parts maker, plans to pay its first dividend in four years after posting a gain in 2011 profit.

Continental today proposed a dividend for last year of 1.50 euros, its first since 2007, the Hanover, Germany-based company said in a statement today. The figure beat the average estimate of 55 cents from 23 analysts surveyed by Bloomberg.

Net income more than doubled in 2011 to about 1.25 billion euros ($1.66 billion) from 576 million euros a year earlier, according to Bloomberg calculations. Continental said today that the dividend payout of about 300 million euros amounts to 24 percent of net income.

“It’s a very positive signal and bodes very well in terms of their confidence and ability to generate cash in 2012,” said Henning Cosman, a Dusseldorf-based WestLB analyst who has an “add” rating on the shares. “Taken with their capital expenditure plans, which are to be 6 percent of sales in 2012, and their statement regarding deleveraging, and paying out this dividend, it’s a very positive signal.”

Continental, which will publish full 2011 figures on March 1, reported increasing earnings and revenue last year on demand for cars in China and the U.S., the world’s two-largest auto markets. Continental expects global automotive sales of 75 million to 78 million vehicles this year.

The shares rose as much as 2.51 euros, or 3.7 percent, to 70.82 euros and were up 2.7 percent as of 2:11 p.m. in Frankfurt trading. The stock has gained 46 percent this year, valuing the company at 14 billion euros.

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