08.03.2018
Continental AG DE0005439004
DGAP-News: Strong Growth and Excellent Financial Position: Continental Paves the Way for Technological Change
DGAP-News: Continental AG / Key word(s): Preliminary Results
Strong Growth and Excellent Financial Position: Continental Paves the Way
for Technological Change
08.03.2018 / 08:30
The issuer is solely responsible for the content of this announcement.
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- Targets surpassed - Continental enjoyed strong growth and profitability in
fiscal 2017
- Sales were up 8.5 percent at EUR44 billion with an adjusted EBIT margin of
10.9 percent
- Net income increased to EUR3 billion and earnings up to EUR14.92 per share
- Executive Board to propose a dividend increase of 25 cents to EUR4.50 per
share
- Incoming orders in the Automotive Group reached a record high of almost
EUR40 billion
- Continental is a pioneer when it comes to technology and is shaping change
in its industries backed by its excellent financial position
- CEO Dr. Degenhart: "Our values, coupled with our mutual aim of creating
value, continue to form the core of Continental's values alliance"
Hanover, March 8, 2018. The technology company Continental enjoyed strong
growth and profitability in fiscal 2017. The company increased its sales by
8.5 percent to EUR44 billion, with an adjusted EBIT margin of 10.9 percent,
thus surpassing its targets for the year. At Thursday's presentation of the
preliminary business figures in Hanover, Dr. Elmar Degenhart, chairman of
the Executive Board, thanked the company's more than 235,000 employees
worldwide for this outstanding achievement: "You have all proven once again
that our values create value. We are in top form financially, are pioneering
technologically, and remain fully focused on the future. This enables us to
shape technological change in our industries as a pioneer and from a
position of strength." The technology company's net income climbed to EUR3
billion in 2017, which equates to an increase of 6.5 percent year-on-year
and earnings of EUR14.92 per share. "The Executive Board is proposing to
increase the dividend by 25 cents to EUR4.50, which will be the sixth
increase in a row," said Degenhart.
He expects this profitable growth to continue in 2018: "The start we have
made to fiscal 2018 has confirmed our expectations. We are therefore
reaffirming our outlook from early January. We intend to continue our
successful course of growth and profitability. For the current year, we are
still anticipating a significant rise in sales of just under 7 percent to
approximately EUR47 billion before exchange-rate effects, with an adjusted
EBIT margin of around 10.5 percent. This is based on growth in the global
production of passenger cars and light commercial vehicles of more than 1
percent to 96.5 million vehicles."
Leading the way in safe, clean and intelligent mobility
The chairman of the Executive Board believes the technology company to be
ideally equipped for the mobility of the future: "Continental is a pioneer
when it comes to technology. We are continuing to invest heavily in the
technologies of tomorrow, and this strategy is paying off. Take for example
our incoming orders in the Automotive Group: We achieved a new record high
of nearly EUR40 billion in 2017," he said, adding: "Our innovative
technologies and the intelligent use of software, electronics and sensor
technology are allowing us to make automated and autonomous driving, along
with connectivity and electrification, a reality. We are also developing new
business areas and customer groups in innovative mobility services. More
than any other company in the world, Continental is synonymous with safe,
clean and intelligent mobility."
A 42,000-strong global network of developers and experts of 146 different
nationalities is conducting research on how to make Continental's products
and services even more intelligent. "Enhanced with software and intelligent
sensors, our products and services keep traffic and goods flowing worldwide
- from industrial systems, robots, drones, to cars," commented Degenhart,
adding: "In 2017 alone, our customers from a wide range of industries
installed more than 600 million Continental sensors. Today, three out of
four cars worldwide feature our solutions, products and systems."
This is particularly relevant for automated and autonomous driving. Cameras,
radar and lidar sensors record data at a rate that can exceed 10 gigabytes
per second already at present in the early stages of this technology, and
that will increase even more in the fully automated driving stage in the
future. Since 1999, Continental has produced around 60 million sensors for
advanced driver assistance systems in total for this purpose - and this
number is rising fast.
When it comes to the combination of drive systems in the future, electric
mobility will play a key role. Continental is one of the few system
suppliers that can offer full electrification of the powertrain from a
single source - from the electric motor to power electronics to energy and
thermal management, through to charging technology.
An increasing number of trucks are being equipped with electronic horizon
(eHorizon), a highly accurate digital road map as a sensor that ensures
drivers drive more efficiently. Since it was brought to market in 2012, this
Continental technology has reduced diesel consumption by over 700,000
liters. Altogether, more than 33 million cars and trucks have already been
connected with Continental's intelligent technology.
The technology company is also making tires intelligent. They increasingly
come fitted with a few grams of lightweight sensors, which measure air
pressure inside the tire itself, ensuring greater safety, less rolling
resistance and enhanced efficiency. In 2017 alone, Continental produced some
155 million passenger and truck tires. The latest conveyor belts and hoses
likewise live up to this technological trend, with integrated sensor
technology that autonomously detects the transported weight and reports any
required maintenance and repair work in advance. This means that
transportation can keep flowing until an optimum repair time presents
itself, thereby minimizing operating costs.
Shaping change, backed by a solid framework of values and from a position of
strength
Speaking about the transformation of the automotive industry, Degenhart
stressed: "Fast-paced technological change requires our global team to
demonstrate the highest levels of flexibility and agility. That is why we
are examining how we can gear our organization toward rapid growth and
maximum value creation in the long term. We are currently assessing our
options. A plan is yet to be finalized." He also referred to the DAX
company's adaptability: "Continental has been undergoing a process of
gradual transformation for nearly 150 years. In the past 20 years alone,
Continental has transformed from a purely tire manufacturing business and
industrial partner into a global technology company."
Referring to this transformation, Degenhart underscored the significance of
Continental's pioneering corporate culture: "Over the past few years, we
have developed and strengthened the shared values of Continental. This has
provided the key foundation for successfully shaping the transformation
within our industries and safeguarding the future and viability of our
organization. This foundation, coupled with our joint aim of value creation,
continues to form the core of Continental's values alliance. This
encompasses all companies in which our corporation has a majority holding,
irrespective of their legal or organizational makeup."
Chief Financial Officer Wolfgang Schaefer spoke about the DAX company's
financial strength: "Having finances that are in excellent shape allows us
to invest heavily and continue to expand our business on a global scale. Our
capital expenditure on property, plant and equipment, together with expenses
for research and development, all of which came to nearly EUR6 billion, are
testament to this. We are also consolidating our strength in a targeted
manner through acquisitions. In the past year alone, we spent nearly EUR600
million on acquisitions. We systematically reduced our net indebtedness at
the same time. We have a rock solid financial basis with a gearing ratio of
12.6 percent and an equity ratio of 43.5 percent."
Hedged against exchange-rate fluctuations and raw-material price increases
under control
When asked about the considerable exchange-rate fluctuations seen at times
in recent months, Schaefer was relaxed: "Our margin is hedged because
Continental mostly produces locally for the local markets. Exchange-rate
effects thus impact sales and operating earnings to a similar degree. This
means that the corporation is naturally hedged against fluctuating exchange
rates." Continental states its annual sales targets before any exchange-rate
effects. The absolute impact of this can affect sales significantly,
depending on exchange-rate trends. Continental believes that negative
exchange-rate effects of more than EUR1 billion are possible in the current
fiscal year, assuming the current exchange rates represent the average for
the year as a whole.
Turning his attention to the commodities markets, Schaefer commented that
Continental could deal with the levels of price changes seen over the past
three years. That said, in the current year Continental still anticipates
additional negative effects of approximately EUR50 million from price
increases for natural and synthetic rubber.
Sales climbed by EUR3.5 billion, or 8.5 percent, to EUR44.0 billion. Organic
sales growth, i.e. adjusted for changes in the scope of consolidation and
exchange-rate effects, came to 8.1 percent.
EBIT rose by EUR466 million, or 11.4 percent, to approximately EUR4.6
billion in fiscal 2017. The EBIT margin came to 10.4 percent after 10.1
percent in fiscal 2016.
Adjusted EBIT, adjusted for changes in the scope of consolidation,
acquisition-related amortization and special effect, amounted to over EUR4.7
billion in 2017. This corresponds to an adjusted EBIT margin of 10.9
percent. The absolute figure was 10 percent higher than the previous year's
figure of EUR4.3 billion, which represented a ratio of 10.6 percent in 2016.
With regard to the comparison with the previous year, Schaefer mentioned a
number of isolated, unrelated events that impacted the previous year's
result with around EUR480 million.
In 2017, Continental invested roughly EUR2.9 billion in property, plant and
equipment, and software. This drove the capital expenditure ratio up to 6.5
percent after 6.4 percent in the previous year. Research and development
expenses rose by 10 percent year-on-year to EUR3.1 billion, corresponding to
7.1 percent of sales (2016: 6.9 percent).
As at the end of 2017, Continental's liquidity reserves totaled
approximately EUR5.6 billion, consisting of cash and cash equivalents of
EUR1.9 billion and committed, unutilized credit lines of EUR3.7 billion.
"The available funds combined with our extremely low indebtedness give us
considerable flexibility and the capacity to respond quickly to change,"
explained Schaefer.
The positive business performance resulted in a growing number of employees.
At the end of 2017, the technology company employed more than 235,000 people
worldwide, over 15,000 more than at the end of 2016. This increase can be
attributed primarily to extended production capacity, growth through
acquisitions and systematic expansion of the R&D areas.
Continental develops pioneering technologies and services for sustainable
and connected mobility of people and their goods. Founded in 1871, the
technology company offers safe, efficient, intelligent, and affordable
solutions for vehicles, machines, traffic, and transportation. In 2017,
Continental generated preliminary sales of EUR44 billion and currently
employs more than 235,000 people in 61 countries.
Contact for journalists
Henry Schniewind
Spokesman, Business & Finance
Continental AG
Phone: +49 (0) 511 938 1278
Cell: +49 (0) 151 688 64 262
E-mail: [email protected]
Vincent Charles
Head of Media Relations
Continental AG
Phone: +49 (0) 511 938 1364
Cell: +49 (0) 173 314 5096
E-mail: [email protected]
Link
Press portal:
www.continental-press.com
Video portal:
http://videoportal.continental-corporation.com
Continental financial reports:
www.continental-ir.com
Media database:
www.continental-mediacenter.com
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08.03.2018 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Continental AG
Vahrenwalder Straße 9
30165 Hannover
Germany
Phone: +49 (0)511 938-1068
Fax: +49 (0)511 938-1080
E-mail: [email protected]
Internet: www.conti.de
ISIN: DE0005439004
WKN: 543900
Indices: DAX
Listed: Regulated Market in Frankfurt (Prime Standard), Hamburg,
Hanover, Stuttgart; Regulated Unofficial Market in Berlin,
Dusseldorf, Munich, Tradegate Exchange; Luxemburg, SIX
End of News DGAP News Service
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661655 08.03.2018
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