In the first half of 2018, exchange-rate and inventory-valuation effects will impact earnings by around €150 million. This relates mainly to the Tire division. Accordingly, the Rubber Group’s adjusted operating result (adjusted EBIT) was already around €100 million lower in the first quarter of 2018 than in the same period of the previous year.
As at April 18, 2018, it was not expected to be possible to compensate for these effects in the Rubber Group over the course of the year. We therefore lowered our forecast for the Rubber Group’s adjusted EBIT margin in 2018 from around 15% to more than 14% on the same date. For the corporation, this also required that the forecast for the adjusted EBIT margin be lowered from around 10.5% to more than 10%.
Based on our market assumptions and provided that exchange rates remain constant in comparison to 2017, we still anticipate an increase in the Rubber Group’s sales to around €18.5 billion. Under the same conditions, for the Automotive Group we still anticipate sales to increase to approximately €28.5 billion with an adjusted EBIT margin of around 8.5%.
This results in sales of around €47 billion for the Continental Corporation for 2018, assuming constant exchange rates in comparison to 2017. In the first quarter of 2018, exchange-rate effects had a negative impact on sales of €546 million. If the current level of exchange rates persists until the end of the year, this could have a negative effect on consolidated sales of more than €1 billion. For the Rubber Group, every U.S. $10 increase in the average price of crude oil equates to a negative annual gross effect on EBIT of around U.S. $50 million. The average price of North Sea Brent was around U.S. $54 in 2017 and U.S. $67 in the first quarter of 2018. As a result, we still expect costs for carbon black and other chemicals to increase by at least 10% compared to the average prices in 2017. For butadiene, a base material for synthetic rubber, we are lowering our forecast for the average price for the year from U.S. $1.60 per kilogram to U.S. $1.51 per kilogram. The average price for the year for natural rubber is currently expected to be below the previous year’s level (2017: U.S. $1.67 per kilogram for TSR 20). We are lowering our forecast from U.S. $1.84 per kilogram to U.S. $1.60 per kilogram. For 2018 as a whole, we currently expect that the developments in the prices of raw materials in the Rubber Group will almost balance each other out.
In 2018, we still expect the negative financial result before effects from currency translation, effects from changes in the fair value of derivative instruments, and other valuation effects to be less than €180 million. The tax rate should be less than 30% in 2018.
For 2018, we still anticipate negative special effects to total €100 million. Amortization from purchase price allocations, resulting primarily from the acquisitions of Veyance Technologies (acquired in 2015), Elektrobit Automotive (acquired in 2015), and the Hornschuch Group (acquired in 2017), is expected to total approximately €180 million and to affect mainly the ContiTech and Interior divisions.
In fiscal 2018, the capital expenditure ratio before financial investments will increase to around 7% of sales as announced. Approximately 60% of capital expenditure will be attributable to the Automotive Group and 40% to the Rubber Group. For 2018, we are still planning on achieving free cash flow of approximately €2 billion before acquisitions.
2018E as of May 8, 2018 published in the presentation results for Q1 2018