Continental said its 2007 net profit including VDO, which was consolidated as of December 1, was 1.02 billion euros after 2006 net profit of 981 million.
CEO Manfred Wennemer said the company will focus on reducing debt. “Reducing our debt has the highest priority,” Wennemer said during Continental’s annual press conference
Continental has so far been unable to place a planned 1.5 b€ hybrid bond as part of its financing package for the 11.4 b€ VDO acquisition. “At the present moment, market conditions for this instrument do not allow an issue at reasonable conditions,” chief financial officer, Alan Hippe said. “If the market environment for hybrid bonds remains extremely difficult, this could put pressure on the rating under some circumstance, which we would not welcome,” he said.
Looking ahead, Continental said it expects 2008 sales to come in above 26 b€, which is the 2007 figure of Continental’s sales plus sales generated by former Siemens unit VDO that Continental acquired last summer. The deal made Continental the fifth-largest automotive parts supplier worldwide.
It said it sees its EBIT margin, including VDO, but before restructuring and integration costs at above 9.3 percent.
Continental hiked its guidance for annual synergies from the VDO integration to 300 m€ from 2010.
Wennemer said Continental has cut 1,800 jobs by not filling vacancies by January and plans to cut another 2,000 jobs to meet synergy targets. He said, in addition, 450 jobs will be cut as a production site in Wetzlar, Germany, is to be closed.
Wennemer said the company still sees integration and restructuring costs in 2008 and 2009 in a lower three-digit m€ range.
The increase in Continental’s full-year EBIT mainly came on the back of its automotive systems division.