Continental AG Sees Possible Acceleration in 2014 Growth

Continental AG, Europe’s second-largest maker of auto parts, expects sales growth to accelerate next year if economic conditions don’t deteriorate.

Continental is “likely to post high single-digit growth in sales again in 2014,” the Hanover, Germany-based company said in its annual report today.

Continental stuck with its forecasts for 2013 even as the Europe’e auto market declined more than industry executives had anticipated in the first quarter. The manufacturer expects sales growth of 5 percent this year and targets adjusted earnings before interest and taxes above 10 percent of revenue.

Continental, also the region’s second-largest tiremaker, has partly avoided the effects of Europe’s recession by following Volkswagen AG, Bayerische Motoren Werke AG and Daimler AG into growing markets such as China and the U.S. Focus on high-value parts such as fuel-injection technology, safety sensors and emergency braking systems has also won high-end customers willing to pay more for the products.

The 2014 predictions are based on the International Monetary Funds’ forecast from January that the global economy will grow more than 4 percent next year and that economic activity in the euro area will see a considerable pickup.

“To accompany this growth with sufficient capacity, investments equivalent to roughly 6 percent of consolidated sales would be necessary, although we would still finance these entirely from free cash flow,” Continental said.

Net debt is expected to decrease next year, the company said.

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