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Continental AG focusing on purchases in Asia and eastern Europe

Continental AG, the world's fourth- largest tiremaker, expects business in the 4Q to be “very positive” as customers buy more winter tires and sales to manufacturers rise, Chief Financial Officer Alan Hippe said.

“October was a very, very strong month and the OE business in Europe, as well as in Asia, is doing very well, and things look good,” said Hippe, referring to direct sales to car manufacturers, in an interview in London on Wednesday. “Therefore, I see the fourth quarter as very positive.” Continental aims to increase earnings before interest and tax as well as revenue next year following the acquisition of Motorola Inc.'s car-electronics unit. The company has a goal of increasing efficiency by 5% a year and has expanded production in eastern Europe and Asia to meet growing demand for tires and car parts in those regions. The cost to integrate and reorganize the Motorola division will reach €110 million ($142 million) in the 4Q, Hippe said, adding that he couldn't exclude integration costs next year as well. The company is looking at “a lot of targets” for possible purchases, Hippe said. Availability of companies to buy is the main issue and the company is focusing on purchases in Asia and eastern Europe, he added. Sales of tires to car manufacturers in the US will decline next year from about 13.5 million units in 2006. The business of selling tires directly to consumers, known as replacement tire operations, will be profitable this year, Hippe said. (Bloomberg)