FRANKFURT (Bloomberg) -- Continental AG said revenue may rise by as much as 10 percent this year after the German supplier beat sales and earnings goals for 2010.
“We have proven in the past that we can grow faster than the market,” CEO Elmar Degenhart said Tuesday at the Detroit auto show. A 5 percent to 10 percent sales increase is realistic based on global light-vehicle sales projections for a “very good 2011.”
Revenue last year exceeded 25.5 billion euros ($33 billion), Continental said in a statement. That beat the 25 billion euros forecast by the company in November. Earnings before interest, taxes and one-time gains or costs amounted to about 9.5 percent of sales.
Growth in emerging economies such as China and Brazil and a rebounding U.S. market are helping Continental generate cash as it pays off debt that amounted to as little as 7.6 billion euros as of Dec. 31.
The company said in November that net income in 2010 would be held back by a 50 percent tax rate and rising raw-material prices. The manufacturer is scheduled to report detailed figures for last year in March.
Worldwide light vehicle sales will probably grow by 6 percent to 7 percent, Degenhart said. The company is cautious about the second half of the year because of risks stemming from European sovereign debt, he said. Continental had a net loss in 2009 of 1.65 billion euros on sales of 20.1 billion euros, with an adjusted Ebit margin of 5.8 percent.
The tire maker, which is also Europe's second-largest producer of auto parts, said last month that it's looking at options for a “possible” merger with main shareholder Schaeffler Group, denying a report that it wanted to halt the combination. Schaeffler, the world's second-biggest roller-bearing maker, piled up as much as 12 billion euros of debt in a 2008 takeover attempt. It now controls 75 percent of Continental's stock.
“For the current situation, it's the right thing to do” to cooperate with Schaeffler on an operating level without pursuing a merger, Degenhart said, adding that he's open to an eventual combination.
Car sales in China, the world's biggest auto market, soared 33 percent to 13.8 million vehicles last year, while the U.S. market grew 11 percent to 11.6 million cars. Registrations in Europe, Continental's biggest market, declined 5.7 percent in the 11 months through November as government incentives expired.
Demand for cars helped Continental's powertrain unit report a profit in the fourth quarter and achieve the division's first annual profit since its creation in 2007, the company said.
The rubber division's costs for raw materials rose by 480 million euros from a year earlier, according to the company. Natural-rubber prices have been increasing with the economic recovery and reached a record high today. The increases prompted Continental to raise prices for replacement tires in 2010.