9M 2019 Results Hanover – November 12, 2019 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR Wolfgang Schaefer – CFO http://www.continental-ir.com
Agenda 1 Current Market Situation 3 2 Corporation Highlights 6 3 Automotive Group 9 4 Rubber Group 11 5 Indebtedness and Cash Flow 13 6 2019 Outlook 16 7 Back-up and 2017 – 9M 2019 Fact Sheets 26 9M 2019 Results – November 12, 2019 2 EDMR – Equity and Debt Market Relations
1) Current Market Situation Numerous Challenges Facing Continental Today Continental Strategy 2030 Influencing Factors › Planning assumes no material recovery in 2020-2024 Overall Economic › At best, LV production in 2020 at same level as in 2019, Situation if not decline for 3 rd consecutive year › Tires market headwinds increasing › Disruptive technologies present opportunities for › Efficiency and productivity increase through Technological Changes Continental, but also for new competitors adjustments in organization and portfolio › Role of digitalization and Industry 4.0 in Continental’s › Greater focus on key growth areas of the future Digital Transformation transformation and competitiveness › 100% spin-off of the Powertrain division › Legislated changes directly impacting viability of certain Regulatory Changes business areas Competitiveness › Need to improve cost position of certain products and locations 9M 2019 Results – November 12, 2019 3 EDMR – Equity and Debt Market Relations
1) Current Market Situation Key Details of Structural Program Performance and Cost Management Footprint Portfolio Labor force adaption; variable Closures in Tires, ContiTech and Sale of 50% stake in SAS joint headcount down 5% YoY 1 Chassis & Safety currently being venture from Interior implemented › Possible sale of businesses and Reductions in capex Stakeholder consultation underway (sub)segments Optimization of working capital in Powertrain and Interior › Further measures in preparation › Further adjustments to production, R&D and administrative footprints in preparation ~€500 million ~€1.1 billion Reduction in gross costs one-time costs, mostly annually from 2023 incurred by end of 2022 1 Excluding acquisitions 9M 2019 Results – November 12, 2019 4 EDMR – Equity and Debt Market Relations
1) Current Market Situation Making Progress in Long-Term Growth Areas Clinton Rayong Vitesco Technologies Interior Division Tires Division Start of volume production of EMR3 InCar Application Server (ICAS1) for Grand opening of new plants in › Integrated high-voltage axle drive Volkswagen’s ID electric vehicles Thailand and U.S.A. › Best-in-class power density, size and › New server concept as central element for a › Both plants commencing initial production weight › Ramp up over the next 4 years service-oriented electronics architecture › Drivetrain for BEVs Peugeot’s e-208 and › Builds upon Continental’s and Elektrobit’s › New plants are part of Continental’s Tire Opel’s Corsa-e, as well as Hyundai’s leadership in vehicle electronics and software Division’s ‘Vision 2025’ growth strategy to Encino and Lafesta for the Chinese market have a more balanced global footprint 9M 2019 Results – November 12, 2019 5 EDMR – Equity and Debt Market Relations
2) Corporation Highlights Most Important KPIs for 9M 2019 9M/2018 9M/2019 Delta Comments Sales €33.2 bn €33.4 bn 0.7% Organic growth -2.1%; FX +€504 mn Adj. EBIT 1 €3.0 bn €2.4 bn -20.8% Adj. EBIT 1 margin 9.0% 7.2% -180 bps PPA 2 -€128 mn -€134 mn Special effects €125 mn -€2,621 mn Non-cash impairment effect -€2,522 mn NIAT 3 €2.2 bn -€0.9 bn IFRS 16 impact on D&A 6 +€256 mn Free cash flow before acquisitions 4 €370 mn -€266 mn Gearing ratio 17% 34% IFRS 16 impact +1,090 bps Equity ratio 45% 37% Trailing ROCE 5 18.3% 2.5% -1580 bps IFRS 16 impact -100 bps › Order intake in the Automotive Group of about €22 bn lifetime sales (book-to-bill ratio of 1.1) › Successful placements of two bonds (€1,100 mn total) at nearly zero rates in September › Additional private placements (€300 mn total) at attractive rates in October › Completion of purchase of thermoplastic specialist Merlett Group on November 4, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects 9M 2019 Results – November 12, 2019 2 Amortization of intangibles from PPA 6 3 Attributable to the shareholders of the parent EDMR – Equity and Debt Market Relations 4 In 2018 excluding net effect of US pension funding, in 2019 excluding carve-out effects 5 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by average operating assets for the LTM 6 Depreciation and amortization
2) Corporation Highlights Sales and Adjusted EBIT 1 by Quarter FY Sales €44,009 mn FY Sales €44,404 mn 9M Sales €33,414 mn Adj. EBIT 1 €2,367 mn 11,374 11,284 11,264 11,230 11,103 11,033 11,047 11,000 11,013 10,788 10,693 1,155 1,066 884 868 769 615 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 1 Sales (€ mn) Adj. EBIT (€ mn) 9M 2019 Results – November 12, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects 7 EDMR – Equity and Debt Market Relations
2) Corporation Highlights Growth Profile of the Corporation Q3 2019 Conti ContiTech Automotive Group -2% 0% organic sales growth organic sales growth PC & LT prod. PC & LT prod. -3% -3% growth global Market growth global PC & LT prod. Europe, GDP growth 1.7% -2% 1 North America, China advanced economies 2019 1 According to IMF definition (WEO Update October 2019) Conti Passenger & Light Truck Commercial Vehicle 0% -1% tires volume growth tires volume growth Replacement tire Replacement tire -2% 0% volume growth Europe volume growth Europe Market Replacement tire volume Replacement tire volume -12% 1% growth North America growth North America 9M 2019 Results – November 12, 2019 8 EDMR – Equity and Debt Market Relations
3) Automotive Group Key Performance Indicators in Q3 2019 Chassis & Safety Automotive Group Adj. EBIT 1 margin Sales (€ mn) Org. growth 6,814 6,978 6,652 6,689 6,762 6,555 6,411 2,290 -0.3% 6.5% (+150 bps YoY) › Ramp up of MK C1 brake business, higher volumes in ADAS Powertrain 557 553 368 357 254 102 Sales (€ mn) Org. growth Adj. EBIT 1 margin 1,926 0.4% -6.5% (-310 bps YoY) › Negative margin due to warranty topics of €165 mn Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 › Adj. EBIT 1 margin excluding HEV about -3% 1 Sales (€ mn) Adj. EBIT (€ mn) Interior Sales (€ mn) Org. growth Adj. EBIT 1 margin › Reported EBIT: -€2,425 mn (-37.0% of sales) 2,409 0.7% 3.3% (-560 bps YoY) › R&D (net): €740 mn (11.3% of sales) › Sales growth from higher volumes in the area of connectivity › Capex: €484 mn (7.4% of sales) › Margin lower due to FX, warranty topics, higher R&D and D&A 9M 2019 Results – November 12, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects 9 EDMR – Equity and Debt Market Relations
3) Automotive Group Organic Sales Growth vs. PC & LT 1 Production Growth of organic sales vs. PC & LT 1 production Organic sales growth by division in 2019 8% 6% 5% 2% 1% 0% 0% 0% 0% -1% -1% -2% -3% -3% -4% -4% -5% -5% -5% -6% -6% -7% -8% Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Interior Chassis & Safety Powertrain Automotive Group PC & LT prod. growth ww 9M 2019 Results – November 12, 2019 1 Passenger cars and light trucks <6 metric tons 10 EDMR – Equity and Debt Market Relations
4) Rubber Group Key Performance Indicators in Q3 2019 Tires Rubber Group Sales (€ mn) Org. growth Adj. EBIT 1 margin 2,990 0.6% 14.5% (-140 bps YoY) 4,591 4,518 4,561 4,410 4,390 4,372 4,212 › Better price/mix responsible for organic growth › Volume decline impacted margin negatively › Increased period expenses and ramp-up costs 632 547 535 540 543 544 ContiTech Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Sales (€ mn) Org. growth Adj. EBIT 1 margin 1,598 -2.4% 7.8% (+190 bps YoY) 1 › Automotive business with headwinds from lower volumes Sales (€ mn) Adj. EBIT (€ mn) › First outcome of margin enhancement programs visible › Reported EBIT: €487 mn (10.7% of sales) › R&D (net): €119 mn (2.6% of sales) › Capex: €281 mn (6.2% of sales) 9M 2019 Results – November 12, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects 11 EDMR – Equity and Debt Market Relations
4) Rubber Group Tires Sales Transition Q3 2019 +0.6% org. growth (€ mn) 2,990 2,869 2,852 72 32 49 -15 +1.1% +1.7% -0.5% +4.8% rep. growth Sales Q3 2018 Volume Price/Mix Sales Q3 2019 FX Cons. Sales Q3 2019 before Cons. and FX 9M 2019 Results – November 12, 2019 12 EDMR – Equity and Debt Market Relations
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