Continental to Focus on Digital Mobility Amid `Challenging' 2016

  • Car-parts maker to raise dividend 15% to 3.75 euros a share
  • Company sticks to revenue, earnings forecasts for this year

Continental AG, Europe’s second-biggest car-parts maker, will push into digital technology for vehicles amid a “challenging” automotive market held back by recessions in Russia and Brazil.

“We want to take advantage of the opportunities arising from new, digital mobility concepts in a systematic and focused manner this year,” Chief Executive Officer Elmar Degenhart said Thursday in a statement. “The start we have made to this year in a difficult environment confirms our expectations for 2016.”

Continental pared back expectations for revenue growth this year in January, predicting a a gain of 5 percent to about 41 billion euros ($44.5 billion) compared with a 14 percent jump posted in 2015, citing a slower pace of car production. The Hanover, Germany-based company forecast Thursday that worldwide automotive output will increase 1.5 percent in 2016 to “just under” 90 million vehicles, with “weak development” in Russia and Brazil more than offset by gains in Europe and China.

The manufacturer plans to raise the dividend 15 percent to 3.75 euros a share. That compares with a 4-euro Bloomberg estimate. Earnings before interest and taxes and excluding one-time effects rose 15 percent in 2015 to 4.46 billion euros, with the return on sales widening to 11.8 percent from 11.2 percent, Continental said, adjusting figures released in January slightly upward. The manufacturer also stuck to an adjusted-Ebit margin target of at least 10.5 percent of sales.

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