(Reuters) - Auto parts supplier Schaeffler posted a first-half net loss of 260 million euros ($329 million) after a one-off charge related to a capital increase at Continental AG (CONG.DE) dragged it into the red.

On an operating level, the company dramatically improved earnings, but the privately-owned bearings maker was forced to book a 396 million euro charge after its stake in Continental was diluted to 75 percent earlier this year from a previous level of almost 90 percent.

The privately owned bearings maker reduced its net debt slightly to 5.93 billion euros at June 30 versus the end of December, bringing its leverage down to 3.5 times earnings before interest, tax, depreciation and amortisation (EBITDA).

The company posted a free cash flow of 336 million euros in the first half, after burning 46 million in the year ago period, before including the acquisition of Conti shares in January 2009.

Schaeffler's financial situation is a key factor for credit rating agencies judging the default risk of Continental since the bearings maker effectively dominates the company.

Other News:
Continental Cap Hike Causes Schaeffler H1 Net Loss
Schaeffler CEO Says No Current Plans to Tie up with Continental AG
SKF South Africa - Sharing Engineering Knowledge, Product Quality & Service Excellence@Electra Mining 2010
SKF Supplies Local Gold Mining Group with Custom Designed Sealing Arrangements for Large Diameter Housings
New Road-going Trommel Uses Baldor-Dodge Bearings to Simplify on-site Maintenance
Schaeffler Group Demonstrates Operative Strength and Reduces Net Financial Debt
SNL Bearings Denies Stake Sale News
SKF Backup Rollers for Use in Bronx Levelling Machines