Q&A: Continental AG sets sights on three continents

Continental AG has just been through a difficult restructuring period. Its boss Manfred Wennemer spoke to Automobilwoche about the supplier's priorities in the USA, Europe and developing markets such as China.

Mr. Wennemer, business was rather disappointing for many car companies in 2004. How does it look for Continental?

We will achieve a good overall result this year. Besides increasing our sales we will also be able to improve our earnings compared with the 2003 record year. And that despite restructuring costs of around 120 million euros for our U.S. plant in Mayfield, Kentucky. Without those costs the group will have a 2004 EBIT well above 1 billion euros.

The ContiTech division is going to merge with Phoenix. Now many employees at the supplier from Hamburg are worried that they may lose their jobs.

Many of the rumors around job cuts are very much politically influenced. It is clear, however, that after the merger two head offices will no longer be necessary. But it would be too early to give any exact figures before the special general meeting on December 28. And as long as the employees concerned are flexible with regard to where they work, there will be jobs for many of them within the new company.

Are you happy with the way the Conti share has performed after the return to the DAX?

Our shares still have a lot of potential. The share price has developed positively but the valuation of the group has not risen at the same ratio as our profitability has improved. There is no question about it that compared with our competition we are still underrated.

Is Conti positioned sensibly with regard to the globalization of the automotive industry?

I am thoroughly convinced of that. Our planned cooperation with Qingdao Doublestar will help us make some headway in the Chinese growth market for example. We are building a new tire plant in Brazil. India is the only empty spot on our map of the world. However, we have to get our priorities right. Still, if the opportunity to enter the Indian market arises we will act accordingly.

How has your business with winter tires been going so far in Europe?

Extremely well. It has been snowing a lot in November in our main markets Germany, Austria and Switzerland. We sold 13.9 million winter tires in 2003. This year we expect to sell 15 million.

Are you considering raising prices?

We are keeping an eye on the price developments for crude oil, natural rubber and steel. If we cannot make up for new financial burdens internally then we have to pass them on to the market. We have just done that in the USA.

What is your forecast for 2005?

We don't expect passenger car production to worldwide to grow significantly. The trucks business however should continue to improve at least during the first half.

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