By Denna Bowman
Continental AG ’s tyres operation is doing “extremely well”, according to financial analysts.
And there was more encouraging news for the division after the German company’s new chief executive appears to have put an end to notions that it would consider the sale of the Rubber Group, which includes the tyres business.
Elmar Degenhart recently told reporters that management board’s preference is to “keep our portfolio the way it is today.”
The media has been quick to report his remarks owing to the company’s previous position that it would consider the sale of the Rubber Group.
Degenhart’s intimations during an interview with the German automotive industry publication Automobilwoche follow a string of non-verbal cues that suggest differences of opinions with the company and at major shareholder Schaeffler group.
Meanwhile, Deutsche Bank analysts have reported that the company’s tyre operation is doing “extremely well.
Writing in an investor’s note, Deutsche Bank analysts reported that the tyre business’ 11 per cent (combined truck and passenger) operating margin in the first half of 2009 outperformed its rivals.
They concluded: “Even if the group enjoyed a small 45 million euro positive impact from raw material (compared with a small negative of 19 million euros at Pirelli and a bigger negative of 117 million euros at Michelin), they enjoyed a double digit operating profit margin despite a high 20 per cent volume decline.”
Looking forward, Deutsche Bank predicted that the tyre operations will benefit from a positive raw material effect of (200 million euros) and from a volume recovery. The analysts pointed out that tyre operations produce 48 per cent of Continental AG’s group revenues.