German tires, car parts maker Continental 2009 net loss widens 50 percent to $2.2 billion

Continental 2009 loss widens 50 pct to $2.2B

FRANKFURT — German tires and car parts maker Continental AG reported Tuesday that its net loss widened by 50 percent in 2009 as the economic downturn hit the auto industry hard, sapping demand for its products, but said it expected an improvement this year.

Continental, based in Hanover, said the net loss of euro1.65 billion ($2.2 billion) compared with a loss of euro1.1 billion in 2008. Full fourth quarter figures were not immediately available.

Revenue for the year fell 16 percent to euro20.1 billion from euro24 billion in 2008.

Continental said it expects the global production of cars and trucks to increase by around 7 percent in 2010.

The company said it expects the replacement tire market to improve by 2 to 4 percent in Europe and North America. It said it is still difficult to determine sales opportunities in the truck tire replacement market, but many indicators suggest a slight recovery. With those factors in consideration, the company expects revenue to grow about 5 percent in 2010 with a significant increase in earnings before interest and taxes in 2010. In 2009, the company reported an EBIT loss of euro1 billion.

“In the worst financial and economic crisis in decades, Continental has demonstrated its resilience,” Elmar Degenhart, the company’s chief executive, said in the company’s report.

“We have improved our operating base by means of restructuring programs which will have an increasingly positive effect. We have significantly improved our financing and capital structure with a successfully implemented refinancing package,” Degenhart said.

“This lays the foundation for reaping great benefits from the expected market recovery in the coming years,” he said.

The company reported an earnings before interest and tax loss of euro1.6 billion for the automotive group in 2009, compared with an EBIT loss of euro1.2 billion in 2008.

The rubber division reported positive EBIT of euro656 million for the year, from positive EBIT of euro984 million in 2008.

Continental’s total EBIT loss for the year amounted to just over euro1 billion in 2009 from an EBIT loss of euro296 million in 2008.

Continental said it was able to reduce its net debt at the end of the year to about euro9 billion, largely stemming from the euro11 billion takeover of car parts maker VDO in 2007. VDO was once part of German industrial conglomerate Siemens AG.

Continental was acquired by the privately held car parts maker Schaeffler Group KG in January of 2009, in a deal valued at some euro8 billion. The combination of the two companies creates one of the world’s largest auto parts makers, rivaling the likes of Robert Bosch GmbH.

The improved outlook sent shares of Continental nearly 6 percent higher before they settled back at euro33.71, up 3.6 percent.

On the Net:

www.continental-corporation.com