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Frankfurt / AFP
Car parts supplier Continental upped its forecast for 2016 on Wednesday after strong performance in its tyres business.
Chief executive Elmar Degenhart said the group would target an adjusted operating profit of “over 11%”, where previously the target had been set at “around 11%”.
Continental’s net profit in the second quarter grew to 905mn euros, up 14% on April-June 2015 and outstripping the 825mn euros predicted by analysts surveyed by Factset.
Over the first half of the year, the group achieved revenues of 20 billion euros, for an operating profit as measured by EBIT of 2.29 billion euros — up 6.0% compared with the same period in 2015 — and a 13% increase in net profit to 1.64bn euros.
That was largely driven by Continental’s tyres and rubber products division, which enjoyed sales growth and lower raw materials costs than expected, the firm said.
The unit boosted operating profit by 17% compared with the first half of 2015 to 1.4bn euros, on revenues of 7.9bn euros.
Degenhart’s increased target did little to impress investors on the Frankfurt stock exchange, with Continental’s share price among to the worst performers in morning trading with losses of around 1.0%.
Analysts had already been expecting operating profit growth higher than 11% for the year, making the firm’s increased forecast little surprise to the markets.
By contrast, Continental’s revenue growth of 1.6% to 10.2 billion euros in the first half fell short of analysts’ expectations of 10.4 billion euros.