- Continental AG forecasts 2016 margin of more than 10.5%
- Company says 2015 US, Europe growth helped offset weaker China
Continental AG, Europe’s second-largest auto-parts maker, said revenue growth would slow to 5 percent this year as global passenger car production is set to rise only “slightly.”
Sales will grow to about 41 billion euros ($45 billion), the Hanover, Germany-
based company said Monday in a statement. That compares with a 14 percent increase in sales to 39.2 billion euros last year, when acquisitions also boosted revenue. Adjusted earnings before interest and taxes in 2015 amounted to 11.7 percent of sales, meeting a target of exceeding a return on sales of 11 percent. Operating profit rose to 4.4 billion euros.
Concerns that China’s economy is slowing more sharply than estimated pushed European auto-industry stocks to a three-month low on Thursday. While vehicle makers have been expecting the Chinese car market, the world’s biggest, to grow in 2016, the pace of expansion has slowed to less than 10 percent, and manufacturers are also dealing with plunging demand in Brazil and Russia. Continental also said last week that warm Northern Hemisphere weather has held back sales of winter tires, one of its more profitable products.
“Continental is continuing on its path,” said Frank Biller, a Stuttgart, Germany-based analyst with LBBW. While the results met analysts’ expectations, “there’s not too much to feel euphoric about.”
The shares rose 1.3 percent to 205.35 euros at 9:53 a.m. in Frankfurt, reversing an earlier decline of 3.3 percent.
Growth in Europe and the U.S. helped Continental compensate for the cooling Chinese market and major recessions in Russia and Brazil, Chief Executive Officer Elmar Degenhart said in the statement. This year’s adjusted return on sales will be more than 10.5 percent, the company said.
Global car production will rise to 89 million vehicles from 88 million last year, Continental said. The parts maker is scheduled to present detailed earnings numbers on March 3.