9M 2018 Results Hanover – November 8, 2018 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR Wolfgang Schaefer – CFO http://www.continental-ir.com
Agenda 1 Corporation Highlights 3 Automotive Group 2 11 3 Rubber Group 15 4 Indebtedness and Cash Flow 23 5 Status Update: Powertrain Carve-out 26 6 2018 Outlook 31 Back-up and 2016 – 9M 2018 Fact Sheets 7 40 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 2
1) Corporation Highlights Most Important KPIs for 9M 2018 › Sales up to €33.2 bn ; organic sales growth at 4.3%; FX negative at €1.06 bn Adj. EBIT 1 down by 13% to €3.0 bn ; adj. EBIT 1 margin at 9.0% › (PPA 2 - €128 mn and special effects €125 mn) NIAT 3 amounted to €2.2 bn, down by 2% › › Free cash flow amounted to - €5 mn Free cash flow before acquisitions and pension funding amounted to €370 mn Gearing ratio at 17% and equity ratio at 45%; Value creation: trailing ROCE 4 down to 18.3% › › Other topics: › 9M results impacted by ~€115 mn warranty provisions booked in Q3 2018; about €50 mn to be booked in Q4 2018; ContiTech measurement plan implemented; €150 mn margin enhancement targeted over the next 2 years › Order intake in the Automotive Group at almost €30 bn after 9M 2018 › Acquisition of Kmart Tyre and Auto Service, Kathrein Automotive Antenna business, and Anti-Vibration Systems › IFRS 16 adds up to €1.9 bn to operating assets starting 2019; split between Automotive and Rubber Group ~50/50 › Powertrain carve-out fully on schedule; partial IPO possible beginning mid-2019 1 Before amortization of intangibles from PPA, consolidation and special effects. 2 Amortization of intangibles from PPA. 9M 2018 Results – November 8, 2018 3 Attributable to the shareholders of the parent. 4 Trailing ROCE calculated as reported EBIT for the last 12 months (LTM) divided by average operating assets for the LTM. EDMR – Equity and Debt Market Relations 3
1) Corporation Highlights Divisional Highlights for 9M 2018 Automotive Group Rubber Group › Automotive Group: Organic sales increased by 5.0%; › Rubber Group: Organic sales up by 3.3% and adj. EBIT 1 margin down to 13.2% (PY: 14.8%), sales and adj. EBIT 1 exceeding global car production by more than 4%-points; adj. EBIT 1 margin at 6.8% (PY: 8.1%) negatively impacted by FX and under-absorption of fixed cost › Chassis & Safety: 8.1% adj. EBIT 1 margin (PY: 9.2%); › Tires: Adj. EBIT 1 margin at 16.3% (PY: 18.3%); organic sales up by 2.7%; ADAS unit sales up by 32% volumes flat; solid price mix at 3%; FX impacted tire sales negatively by 4%; organic sales up by 2.8% › Powertrain: 2.7% adj. EBIT 1 margin (PY: 5.7%); Tire markets: PC & LT tire replacement demand in organic sales up by 3.6%; Europe was up by 2% and in North America by 3% 9M results impacted by about €80 mn from warranty › ContiTech: Adj. EBIT 1 margin 7.6% (PY: 8.4%); cases organic sales up by 4.3% with main contribution by › Interior: 8.8% adj. EBIT 1 margin (PY: 8.8%); organic the Conveyor Belt Group, Industrial Fluid Systems sales increased by 8.5% still driven by strong demand and Air Spring Systems; for multimedia and connectivity products 9M results impacted by more than €25mn from 1 Before amortization of intangibles from PPA, consolidation and special effects. warranty provisions 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 4
1) Corporation Highlights Selected Recent Press Clippings Continental Supports Hyperloop Technology Jaguar I-PACE: Innovative Continental Power as a Logistics Solution of the Future Electronics for Top-Class Electric Performance New mobility concepts: sustainable, fast and cost-effective New system specially designed for high-end sporty performance. transport of goods possible via Hyperloop Collaboration with Power electronics in Jaguar’s new EV can handle currents up to talented young people at the Emden/Leer University of Applied Go to press release 650 amps. Wide application spectrum: designed for use across Sciences and the University of Oldenburg. Special belts made the entire Jaguar and Land Rover EV line-up; already up and Go to press release of carbon cord and polyurethane from Continental move running in the Range Rover Sport plug-in-hybrid. Built-in success HyperPodX. factor: microchips with double sided sintered technology. Continental Presents ContiConnect ™ Live at IAA Continental Enhances Driver Safety by Eliminating Forward Blind Spots Continental pairs its interior camera and integrated OLED Commercial Vehicles ContiConnect ™ Live, available from the second quarter of displays in the vehicle’s A -pillar for increased visibility and safety. The Continental Virtual A- Pillar tracks the driver’s movements 2019, informs operators of truck and bus fleets immediately if and displays an image of the vehicle’s exterior environment on there is a problem with the temperature or pressure of a tire, the interior OLED displays, enabling the driver to “see through” even when the vehicle is on the road. The data is transferred to Go to press release the servers and the web portal by the ContiConnect ™ Driver the A-pillar. The advanced technology addresses an increasing Go to press release issue on newer vehicles that may require expanded front pillars. app, which is also new. Continental Releases Sustainable Natural Rubber Sourcing Policy PRORETA 4: Continental and TU Darmstadt Develop Machine-Learning Advanced Driver Assistance System Definition of responsibilities within the natural rubber value chain. Contribution to industry-wide platform shall enhance Three use cases in one vehicle: Assistance system helps drivers social, environmental and governance standards when making left turns, entering roundabouts and at right-before- left intersections. The system adapts to the driver’s style of The technology company’s Rubber Group aims at looking at driving, assesses the driver’s behavior and level of attention and workers, communities, forests, biodiversity and agricultural Go to press release Go to press release gives appropriate recommendations. land and detecting potential risks in early stages. 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 5
1) Corporation Highlights Sales and Adjusted EBIT 1 by Quarter FY Sales €40,549 mn FY Sales €44,009 mn 9M Sales €33,174 mn Adj. EBIT 1 €2,992 mn 11,374 11,284 11,033 11,000 11,013 10,788 10,693 10,524 10,191 9,984 9,851 1,164 1,167 1,161 1,104 1,059 772 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 1 Sales (€ mn) Adj. EBIT (€ mn) 1 Before amortization of intangibles from PPA, consolidation and special effects. 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 6
1) Corporation Highlights Automotive Group and Rubber Group by Quarter Automotive Group Rubber Group 6,978 6,814 6,754 6,806 6,661 6,370 6,344 6,411 6,158 6,011 5,958 4,491 4,410 4,382 4,361 4,390 4,260 4,164 4,212 4,045 4,038 3,852 635 641 652 531 631 546 557 554 491 563 561 258 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 1 Sales (€ mn) Adj. EBIT (€ mn) 1 Sales (€ mn) Adj. EBIT (€ mn) 1 Before amortization of intangibles from PPA, consolidation and special effects. 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 7
1) Corporation Highlights Growth Profile of the Corporation 9M 2018 Conti Automotive Group ContiTech 5% 4% organic sales growth organic sales growth PC & LT production PC & LT production 1% 0% Market growth Europe growth, global PC & LT production growth GDP growth advanced -1% 2.4% 1 Europe and North America economies 2018 Conti Commercial Vehicle Passenger & Light Truck 3% -1% Tires volume growth tires volume growth Replacement tire Replacement tire volume 1% 2% Market volume growth Europe growth Europe Replacement tire volume Replacement tire volume 3% 6% growth North America growth North America 9M 2018 Results – November 8, 2018 1 According to IMF definition (WEO Update October 2018). EDMR – Equity and Debt Market Relations 8
1) Corporation Highlights Sustainable Value Creation 21.2% 21.1% 20.6% 20.6% 20.0% 20.0% 19.8% 19.4% 19.0% 18.9% 18.3% 19,767 19,983 20,106 20,453 20,978 21,401 21,886 22,172 22,397 23,256 22,811 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 2 1 Trailing OA (€ mn) Trailing ROCE 1 Trailing operating assets are calculated as assets for the last 12 months (LTM). 2 Trailing ROCE calculated as reported EBIT for the last 12 months (LTM) divided by trailing operating assets. 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 9
1) Corporation Highlights Maturities for Bonds 1 (€ mn) As at September 30, 2018 (€ mn) FY 17 9M 18 Gross indebtedness 4,090 4,809 Cash 1,882 1,622 Net indebtedness 2,048 2,995 Available credit lines 3,687 3,091 Total liquidity 5,568 4,713 1,350 500 2018 2019 2020 2021 2022 Bonds 1 All amounts shown are nominal values. 9M 2018 Results – November 8, 2018 EDMR – Equity and Debt Market Relations 10
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