BERLIN, April 27 (Xinhua) -- The profitability of German automotive parts supplier Continental AG (Continental) was undermined by negative currency effects during the first quarter (Q1) of 2018, the Dax-listed company revealed on Friday during its Annual General Meeting.
Earnings before interest and taxes at the Hannover-based automotive parts supplier declined by 9 percent over the same period last year to about 1.1 billion euros (1.3 billion U.S. dollars), while quarterly gross revenue stagnated at 11 billion euros.
Continental largely blamed the development on adverse exchange-rate effects and emphasized that sales rose by 550 million euros (4.3 percent) on a currency-adjusted basis.
Continental warned that currency effects were likely to continue weighing negatively on the firm's earnings in 2018 and consequently lowered its forecast for operative return slightly to 10.5 percent after 10.9 percent in 2017. The firm's tire production unit, in particular, was likely to be adversely affected by the trend.
Nevertheless, chief executive officer Elmar Degenhart argued that the currency-adjusted increase in revenue provided evidence for a "strong growth dynamic" at the start of the year. Degenhart emphasized that Continental received new orders worth 11 billion euros from customers in Q1, marking "another record" for the company.
"This is a proof of our customers' confidence in us and demonstrates our substantial strength," a statement by Degenhart read.
Furthermore, the CEO highlighted that annual sales in 2017 increased by more than 8 percent compared with the previous year. As a consequence, revenue at Continental grew faster than global production of cars and light commercial vehicles which rose by around 2 percent, a performance which Degenhart described as "an excellent achievement."
Continental confirmed an earlier objective to grow gross annual revenue by around 7 percent to 47 billion euros in 2018. Degenhart also predicted that "organic growth" could lift the figure to as much as 50 billion euros in 2020 and 65 billion euros in 2025.
Continental is the world's second largest automotive parts supplier after German rival Bosch. The Hannover-based firm employs 224,000 staff across the world.
