Tyre maker Continental has pricing power to offset rubber cost - exec

29 July 2011 18:06  [Source: ICIS news]

LONDON (ICIS)--Germany-based tyre major Continental has the pricing power to successfully fight high rubber costs, chief financial officer Wolfgang Schaefer said on Friday.

Continental raised its prices this year, and will continue doing so, to offset rising costs for natural and synthetic rubbers, Schaefer said.

“We have to pass on the high input costs to the end consumer, and we managed to do that, and we are confident this will work into the future,” Schaefer said in a webcast briefing.

Continental raised its full-year 2011 sales target to €29.5bn ($42.1bn), from €28.5bn, as it remains optimistic that sales will continue to grow in the second half of 2011, he added.

"We see from the markets, and from the orders coming in, [business] which is on level with the first and second quarters, and this is what make us confident to raise our [sales] guidance," Schaefer said.

"There is no sign that business should slow down [in the second half of 2011]," he said.

Schaefer also said Continental’s business was affected by disruptions in the automotive supply chain after Japan's earthquake and tsunami disaster in March, “but this didn’t affect us too much in the second quarter.”

Some 120 of Continental’s suppliers were “in one way or another” affected by the Japan disaster, Schaefer said.

“But, with a lot of effort, we managed to keep our supplies to the OEMs [original equipment manufacturers] always running, so we had no disruption of our supply chain,” he said.

ICIS reported this week that Japan’s production of synthetic rubber was down 10.1% year on year in June, and Toyota’s domestic output fell 38% year on year as a result of March’s disaster.

In related news on Friday, French tyre major Michelin said its price increases in the first half of 2011 “totally offset” higher raw material and rubber costs.

“Michelin continues to raise prices in response to rising raw materials costs,” it added.

Meanwhile, US-based tyre major Goodyear said this week price hikes more than offset higher raw material costs.

Goodyear reaffirmed its earlier projection of a 30% year-on-year increase in raw material costs for the remainder of 2011.

($1 = €0.70)

By: Stefan Baumgarten
+1 713 525 2653

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