Continental AG Raises Sales Forecast a Second Time on Currencies

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Continental AG, Europe’s second-biggest maker of car parts, raised its 2015 sales forecast for the second time this year as currency effects and acquisitions contribute to revenue.

Sales will increase more than 11 percent to 38.5 billion euros ($43 billion), Chief Executive Officer Elmar Degenhart said Thursday at the annual shareholders’ meeting in Continental’s headquarters city of Hanover, Germany. The company predicted in March that revenue would rise about 9 percent, up from a forecast in January of 5 percent growth.

Continental, also Europe’s second-biggest tiremaker, has been following customers including Volkswagen AG and Daimler AG into other markets such as the U.S. and China, where car sales have been growing faster than in Europe. The company bought U.S. hose and conveyor-belt maker Veyance Technologies Inc. in a 1.4 billion-euro deal in January, part of a strategy to expand the proportion of sales from outside the auto industry.

The decline of the euro on foreign-exchange markets boosts the value of revenue earned outside Continental’s home market when converted into the region’s common currency. Exchange-rate effects will add 1.3 billion euros to revenue, Continental said Thursday, compared with an earlier estimate of 1 billion euros.

Ebit Prediction

The German company reiterated forecasts that earnings before interest and taxes and adjusted for one-time effects will exceed 10.5 percent of revenue in 2015 and that annual sales by the end of this decade will surge 45 percent to 50 billion euros.

Continental fell as much as 2.8 percent and was trading down 1.6 percent at 210.65 euros as of 1:18 p.m. in Frankfurt. That pared the stock’s gain this year to 20 percent, valuing the manufacturer at 42.1 billion euros.

“Continental didn’t raise their guidance on the margin, unlike last year, and some people were possibly expecting that,” said Marc-Rene Tonn, a Hamburg-based analyst with Warburg Research.

First-quarter adjusted Ebit rose more than 10 percent to about 1 billion euros while sales jumped 14 percent to 9.6 billion euros, Degenhart told shareholders. Costs from the Veyance purchase reduced earnings by about 37 million euros, the company said.

As European replacement-tire and new-car demand grow, “our sales and earnings will also continue to improve in the coming quarters,” the CEO said in a separate statement.

The company is scheduled on May 7 to report detailed earnings figures for the period. An official at Continental said the year-earlier adjusted Ebit number will include a restatement.

Global automotive production will amount to about 89 million light vehicles this year, Continental said, reiterating an earlier forecast. Annual growth is forecast of about 3 percent to 100 million to 105 million vehicles by 2020.

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