May 3, 2013 / 10:11 AM / 4 years ago

UPDATE 1-Continental AG sticks to outlook as business picks up

* Q1 adj EBIT 796.2 mln euros vs 888.7 mln euros year-ago

* Q2 business “has regained momentum” -CEO

* Q1 operating margin 10 pct, FY margin should stay above 10 pct

* Continental has “nothing concrete” to say on purchases -CFO (Adds detail, CFO comments)

BERLIN, May 3 (Reuters) - German auto parts and tyre maker Continental AG said it was sticking to its full-year sales and profit targets on Friday after second-quarter business picked up, making up for a “difficult” start to the year.

First-quarter sales fell 3.4 percent to 8.03 billion euros ($10.50 billion), matching an 8 billion-euro consensus forecast in a Reuters survey, as car production declined 11 percent in Europe and 2 percent in the NAFTA region covering the United States, Canada and Mexico, Continental said on Friday.

But growing auto production in Asia, improving markets in North America and more working days should lift first-half sales to match year-ago levels, finance chief Wolfgang Schaefer told Reuters on Friday after results were published.

“We have signs that business is picking up,” Schaefer said. “New orders in the third and fourth quarter will advance our growth,” the CFO said, citing growing use of advanced technology such as driver assistance systems.

Hanover-based Continental said it still expected annual sales to rise by about 5 percent to more than 34 billion euros and to hold its operating profit margin above 10 percent, after 10.8 percent last year, affirming targets given in January.

First-quarter adjusted earnings before interest and tax (EBIT) declined to 796.2 million euros from 888.7 million a year earlier, compared with a 795 million-euro consensus forecast in a Reuters survey.

Schaefer said Continental wants to expand the share of non-automotive business such as replacement tyres, electronic replacement parts, rubber and plastics to 40 percent of group sales from 30 percent to offset weak economic development and saturated Western auto markets.

Continental remains open to acquisitions through its Contitech rubber and plastics division or other operations but has “nothing concrete” to say about possible current merger activities, the CFO said, declining to be more specific. ($1 = 0.7649 euros) (Reporting by Andreas Cremer; Editing by Maria Sheahan and Peter Dinkloh; Editing by Andrew Heavens)

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