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UPDATE 1-Continental less upbeat as growth in tyre sales slows
August 1, 2013 / 11:28 AM / 4 years ago

UPDATE 1-Continental less upbeat as growth in tyre sales slows

* FY sales now seen at about 34 bln eur vs over 34 bln eur

* “Optimism has lessened” -CFO

* Q3 group sales seen flat on Q2 (Adds analyst comment, background and shares)

BERLIN, Aug 1 (Reuters) - German auto parts and tyre maker Continental AG nudged back its sales outlook for the year, blaming weaker-than-expected demand for spare tyres in Europe.

Full-year sales may increase to about 34 billion euros ($45 billion), Hanover-based Continental said on Thursday, after predicting in early May that sales would exceed that level.

“Optimism has lessened,” finance chief Wolfgang Schaefer told Reuters, citing a weaker outlook for spare tyres.

European auto markets may rebound slightly in the second half after vehicle production fell 6 percent during the first six months, Schaefer said, noting the bottom in the region’s slump has now been reached.

Continental had trimmed its forecast for growth in spare tyre sales in the core European market, accounting for over 60 percent of its tyre sales, to 1 percent from 3 percent, according to the CFO.

Shares in Continental fell 0.5 percent to 117.95 euros at 1057 GMT, making it the second biggest underperformer among German blue chips.

Third-quarter sales will probably be flat on the April-June period when they rose 4.3 percent to 8.54 billion euros, the company said, also citing flattening car production in Asia and the NAFTA region covering the United States, Canada and Mexico.

Still, Continental stood by a goal to hold its operating profit margin above 10 percent, after 10.8 percent last year.

Second-quarter adjusted earnings before interest and tax (EBIT) edged up 1.5 percent to 980.7 million euros, beating the 972 million-euro high-end forecast in a Reuters survey.

“The slight downward revision of targeted sales in 2013 is a bit of a surprise,” Hanover-based NordLB analyst Frank Schwope said. “But it seems only a little problematic given that they’re holding to the margin target.”

$1 = 0.7531 euros Reporting by Andreas Cremer; Editing by Christoph Steitz and Elaine Hardcastle

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