1998 Another Record Year for Continental AG
14 April 1999
1998 Another Record Year for Continental AG
Good Start to 1999
FRANKFURT, Germany, April 14 -- The first three months of
1999 saw consolidated sales rising more than 50% over the same period last
year to reach EUR2.1 billion. First-quarter earnings before interest and
taxes (EBIT) were up 9% to about EUR108 million. Contrary to last year, this
figure includes goodwill amortization amounting to EUR22 million, EUR15
million of which is attributable to Continental Teves.
Continental's net income improved again in 1998 from DM322 million to
DM414 million (+29%). Consolidated earnings before taxes were up year-on-year
by 33% to DM611 million (1997: DM459 million). Consolidated earnings before
interest and taxes (EBIT) rose by 27% from DM627 million to DM797 million.
Net income at the parent company came to DM100 million (1997: DM90 million).
After transferring DM10 million to retained earnings, the net income of
Continental AG available for distribution amounts to DM92 million (1997: DM81
million).
This further pronounced increase in earnings makes it possible to
recommend to the Annual Meeting of Shareholders on June 1, 1999 a dividend for
1998 of 16%, up from 14% in the previous year. This is equivalent to DM0.80
(1997: DM0.70) per no-par-value share. At DM575 million, the capital stock
entitled to the dividend has changed only slightly compared with the previous
year, so that DM92 million (1997: DM80 million) will be required for the
distribution. As in the previous year, the dividend does not include any
German corporation tax credit.
Executive Board Chairman Dr. Hubertus von Grunberg described 1998 as being
"a milestone in the Company's history." "Some of our plans have been
excelled. The good level of business activity in the auto industry, the
continued perceptible trend towards higher grade tires, and our ongoing
programs to enhance profitability have helped us to achieve the breakthrough
in commercial vehicle tires and post a significant earnings improvement for
passenger tires." Commenting on the trend in profits for 1999, von Grunberg
said: "Having reached 3.1% in 1998, we're closer to our goal of an after-tax
result of 4%." It will be necessary, he said, to make further big advances in
profitability in the future, as well.
Developments at Continental Teves are gratifying, said von Grunberg.
"We've met with no surprises whatsoever -- indeed we were already able to book
a positive contribution to the Continental Automotive Systems Group's earnings
for the last quarter." Although the group reported a red zero, this was still
the effect of initial capital expenditures in the future projects ISAD
(Integrated Starter Alternator Damper) and CASS (Continental Air Suspension
System).
The Passenger Tire Group improved its operating income by 25% from DM404
million to DM506 million; sales grew 7.3% from DM4.36 billion to DM4.67
billion. Commercial Vehicle Tires soared up and, for the first time since its
establishment, the group reported a noteworthy profit of DM97 million
following its prior-year loss of DM21 million. Sales of the Commercial
Vehicle Tire Group amounted to DM1.49 billion (1997: DM1.31 billion).
Continental General Tire's operating income advanced about DM10 million to
total DM139 million. Sales were up 2% from DM2.36 billion to DM2.41 billion.
Operating income at the ContiTech Group dropped about DM20 million to DM157
million. Non-recurring charges, start-up costs for new products and
provisions were the reasons for this development. The programs thus financed
will have a performance-improving effect in 1999. Sales increased by 7.7%
from DM3.09 billion to DM3.3 billion. The Continental Automotive Systems
Group reflected the last-quarter sales of Continental Teves for the first
time. Group sales stood at DM1.2 billion, of which about DM1.1 billion
stemmed from Continental Teves. Work on various systems for vehicle chassis
integration progressed well.
The number of employees at year-end grew significantly with the
acquisitions to 62,357 (1997: 44,797). This figure includes about 1,000 new
jobs created by the Company in 1998. Capital expenditures -- additions to
property, plant and equipment -- rose substantially, and amounted to DM814
million in 1998 (1997: DM553 million).
Dr. Jens P. Howaldt, member of the Executive Board in charge of Finance,
Controlling and Law, underlined the Company's sound financial structure. In
the wake of the acquisitions, an equity ratio of 23.2% was still satisfactory,
he said. Moreover, a long-term loan at favorable terms gave the Company the
freedom it needed to finance the acquisitions on the one hand, without losing
its maneuverability in respect of new partnerships on the other hand.