Continental AG Sees 11% Return on Sales on Car-Parts `Momentum'

Continental AG, Europe’s second-biggest car-parts maker, boosted its profit-margin forecast to 11 percent for this year as it expects accelerating growth at the automotive business.

First-quarter adjusted earnings before interest and taxes rose to 1.1 billion euros ($1.25 billion), the Hanover, Germany-based company said Friday in a statement of preliminary figures. That compares with adjusted Ebit of 1.05 billion euros reported a year earlier. Sales gained 3 percent percent to 9.85 billion euros.

“In light of the difficult market environment, we had a good start to the new fiscal year,” Chief Executive Officer Elmar Degenhart said in the statement. “We expect the good development in the rubber group to continue over the remainder of the year, while the automotive group is expected to gain notable momentum again.”

The manufacturer had pared back its forecast for revenue growth this year because of an expected slowdown in global car production, with shrinking economies in Brazil and Russia offsetting increasing demand for autos in China and Europe. The company said last month that it’s increasingly focused on pushing into digital technology as carmakers connect vehicles to the Internet and add autonomous-driving systems that require cameras and sensors.

First-quarter adjusted Ebit, which excludes one-time gains or costs and takeover effects, widened to 11.3 percent of revenue from 10.6 percent a year earlier. Continental raised its margin forecast from a prediction in March of at least 10.5 percent for the full year. Continental said orders from the automotive business rose by more than a third compared with a year earlier. The company is due to report full quarterly earnings on May 4.

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