German automotive supplier, Continental, is raising its sales guidance for 2015 on strengthening demand in core European markets. As Ciara Lee reports, foreign exchange is helping too.
It's Europe's second-biggest maker of car parts and tyres - and 2015 is already gathering speed. Continental is expecting sales to exceed 39 billion euros this year, which would be thirteen percent higher than its 2014 results. The recovery in western European auto markets, where Continental earns about half its revenue, continued in April with car sales up 6.7 percent. CFO Wolfgang Schaefer says raw material prices and the weak euro have also provided a tailwind but that some challenges in Europe remain. (SOUNDBITE) (ENGLISH) WOLFGANG SCHAEFER, CONTINENTAL CFO, SAYING: "We have seen in the first quarter that western European car production was quite nice, specifically the car sales in western Europe were increasing by about four percent. Unfortunately Europe in this regard is hindered in its overall growth by a very weak Russian market.'' Positive effects from foreign exchange developments could boost sales for the company by a billion euros while favourable rubber and oil prices may add an extra 150 million euros. Buoyed by 6.7 billion euros of liquidity reserves, the German firm also hopes to benefit from acquisitions, particularly in non-automotive areas. (SOUNDBITE) (ENGLISH) WOLFGANG SCHAEFER, CONTINENTAL CFO, SAYING: "Our target is to increase our non-OE shares so our business which is not directly with the carmakers and to increase the share of that business in our portfolio. We have a long term target which is to increase the share from today's roughly thirty percent to forty percent. This is because our automotive OE business is growing so fast, this will need some help from M&A activities. We are working on that, we are looking at the market." It comes after the company purchased U.S. rubber company Veyance Technologies earlier this year. The 1.4 billion euro deal was Continental's attempts to diversify and be less dependent on the carmaking industry.