2007.09.25

Hanover, March 2007. During the first six months of 2006, the European commercial vehicle tire market was very mixed. Whilst the original equipment sector started off the year on a high level and managed to maintain this position, the replacement business was affected by marked fluctuations persisting during this period. It was only once the second half of the year began that a positive trend emerged for this sector. These positive signals were set against a background of disproportionately high, unscheduled rises in the price of raw materials. During the second half of the year, the original equipment sector managed additional growth. In 2006, the industrial tire sector further reinforced its market position. All business sectors started off well in 2007.

Developments in the European tire market varied greatly during the last financial year. Whilst the original equipment sector started off well in the 2006 financial year, managing to maintain good sales results during the first six months and achieving substantial increases in the second half of the year, constant fluctuations in the replacement business meant that no clear forecasts could be made. Only at the beginning of the second half year did the situation stabilise, so that for the first time a positive trend could be identified, with indicators pointing towards growth versus the year 2005. The industrial tire sector managed not only to consolidate its global market leadership in 2006, but also to greatly expand it.

At the same time as these different business developments were taking place, material costs rose to such an extent that they jeopardised anticipated returns. The reason for this was quite clearly the costs, which were considerably higher than expected values. This cost pressure could only be partly absorbed by internal measures and price increases. However, despite all measures taken, in total they did not reach the amount required to ultimately offset the costs.

"The European truck tire replacement business just managed to pull through" commented Herbert Mensching, Head of Sales for the Commercial Vehicle Tire division at Continental AG. "We have still not quite digested 2006, though; the repercussions from that year are still with us."

All markets started off relatively well in 2007. Demand in the month of January clearly revealed limitations in the supplies available, with tire manufacturers unable to service the markets adequately. This applies to both the OE and the replacement business. "Overall, the trend continues to be upwards, with demand ensuring production is running to capacity. Where possible, production will be increased" commented Herbert Mensching. He also made clear, however, that cost pressure was still an issue that would continue to require regulatory measures.

The financial year 2006 - figures - data - facts

Continental's Commercial Vehicle Tire division increased its turnover by 6.5% to around 1.5 billion euros compared with the previous year (2005: 1.4 billion euros). Adjusted for scope of consolidation and one-off effects, this represents an increase in EBIT of almost 3 million euros, equivalent to an increase of 2.6%. The increased prices of raw materials amounting to approx. 110 million euros adversely affect the results compared with the previous year. The division increased its global sales of truck tires by more than 4% to almost 7 million units. The Commercial Vehicle Tire sector has over 8,000 employees worldwide, with more than 2,000 of these working in Germany.

Continental Truck Tires, Europe

As one of the largest manufacturers of premium tires for commercial vehicles, Continental carries a broad range of high‑performance products finely tailored to specific application areas for heavy‑duty and light trucks, buses and off‑road vehicles. Continental AG produces truck and bus tires under the Continental, Uniroyal, Semperit and Barum brand names. In existence since 1978, the ContiBreakdownService is an immediate‑response network of authorized dealerships providing an added margin of safety in the event of a flat tire.

The Continental Corporation is a leading supplier of tires, brake systems, chassis components, vehicle electronics and technical elastomers. Consolidated sales in 2006 amounted to 14.887 billion and employees currently number approximately 85,000 worldwide.

The tire division is an Official Sponsor of UEFA EURO 2008^TM. For further information visit the websites www.ContiSoccerWorld.de, www.contifanworld.com and www.conti-online.com.