Continental has at least EUR3 billion for acquisitions: CFO

December 18, 2017

ContinentalGermany’s Continental has at least EUR3 billion (US$3.53 billion) ready for acquisitions to expand into growing automotive markets led by Asia, Chief Finance Officer Wolfgang Schaefer said in a recent interview.

“The financial scale for acquisitions certainly amounts to over EUR3 billion at the moment, if we wanted to tap into the full potential, maybe even a little higher,” he told the Boersenzeitung daily.

Asked if Conti, the world’s second-largest automotive supplier, could make any major acquisitions within the next year, Schaefer said this could not be ruled out although it was mostly unlikely within the next few months.

The company said last month it expects “strong” profit and sales in the fourth quarter as carmakers’ accelerating embrace of electric and self-driving technologies boosts orders at the core automotive business.

The Hanover-based group makes fuel-injection systems, vehicle tyres and driver-assistance technology, serving both the traditional and cutting-edge car industries.

Schaefer said with very low debt, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) would exceed net debt even if it used up the current war chest for acquisitions.

“The scope certainly has become bigger through the positive development of the company in recent years,” he said.

Tyre sales are stronger in the current winter season, he added: “We should perform better than in the previous year.”

Turning to raw materials prices, he upheld an estimate for a EUR450 million cost burden in the company’s tyre-making Rubber Group division. Raw materials costs were assumed to be falling in first half of 2018, increasing again in the second half, he said.

The loss-making Hybrid Electric Vehicle (HEV) division, which is expected to see up to an eight-fold rise in sales to EUR 1 billion by 2020-2021, is set to break even in either 2020 or 2021, he added.

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