H1 2019 Results Hanover – August 7, 2019 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR Wolfgang Schaefer – CFO http://www.continental-ir.com
Agenda Current Market Situation 1 3 2 Corporation Highlights 5 3 Automotive Group 8 4 Rubber Group 10 Indebtedness and Cash Flow 5 12 2019 Outlook 6 15 Back-up and 2017 – H1 2019 Fact Sheets 7 24 H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 2
1) Current Market Situation PC & LT 1 Production: H2 below H1 in Our Core Markets 2 Europe (mn units) North America (mn units) China (mn units) 2017: 22.1 2018: 21.7 2019E: 21.0 2017: 17.1 2018: 17.0 2019E: 16.6 2017: 27.7 2018: 26.6 2019E: 24.0 (-3% yoy) (-2% yoy) (-10% yoy) H1 2019 Results – August 7, 2019 1 Passenger car and light truck <6 metric tons 2 Source: IHS and own estimates, Europe excluding Kazakhstan and Uzbekistan EDMR – Equity and Debt Market Relations 3
1) Current Market Situation Measures to Improve Competitiveness and Viability Already in Progress Already Activated Levers Further Fields of Actions Performance & Cost Management Footprint Portfolio ✓ Capacity reduction in Tires ✓ Stronger focus on electrified ✓ Labor force adapted to lower volumes ✓ Tighter control of fixed and variable costs drive systems and e-mobility and ContiTech announced ✓ Reductions in capex spending ✓ Stop activities investigating › Preparing further ✓ Margin enhancement programs in Powertrain and ContiTech battery cell production adjustments to production, R&D and administrative › Further adjustments in preparation › Further measures in footprints preparation H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 4
2) Corporation Highlights Most Important KPIs for H1 2019 H1/2018 H1/2019 Delta Comments €22.4 bn €22.3 bn Organic growth - 2.9%; FX +€333 mn Sales -0.3% €2.2 bn €1.8 bn Adj. EBIT 1 -21.1% Adj. EBIT 1 margin 9.9% 8.0% -190 bps - €85 mn - €91 mn PPA 2 - €1 mn - €80 mn Carve-out effects - €20 mn Special effects €1.6 bn €1.1 bn NIAT 3 -32.0% IFRS 16 impact on D&A 5 +€158 mn €296 mn - €609 mn Free cash flow before acquisitions excluding carve-out effects Gearing ratio 17% 31% IFRS 16 impact +960 bps Equity ratio 43% 41% Trailing ROCE 4 19.4% 13.5% -590 bps IFRS 16 impact -50 bps › Order intake in the Automotive Group of about €16 bn lifetime sales (book -to-bill ratio of 1.2) › Business win for ADAS Domain Control Units worth >€500 mn lifetime sales, SOP 2022 › Closing of the acquisition of the anti-vibration systems business of Cooper Standard, consolidation since April 1, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects H1 2019 Results – August 7, 2019 2 Amortization of intangibles from PPA EDMR – Equity and Debt Market Relations 5 3 Attributable to the shareholders of the parent 4 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by average operating assets for the LTM 5 Depreciation and amortization
2) Corporation Highlights Sales and Adjusted EBIT 1 by Quarter FY Sales €44,009 mn FY Sales €44,404 mn H1 Sales €22,311 mn Adj. EBIT 1 €1,752 mn 11,374 11,284 11,264 11,230 11,033 11,047 11,000 11,013 10,788 10,693 1,155 1,066 884 868 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) H1 2019 Results – August 7, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects EDMR – Equity and Debt Market Relations 6
2) Corporation Highlights Growth Profile of the Corporation Q2 2019 Conti Automotive Group ContiTech -5% -2% organic sales growth organic sales growth PC & LT prod. PC & LT prod. -7% -7% Market growth global growth global PC & LT prod. Europe, GDP growth , -9% 1.9% 1 North America, China advanced economies 2019 1 According to IMF definition (WEO Update July 2019) Conti e Passenger & Light Truck Commercial Vehicle -1% -3% h tires volume growth tires volume growth Replacement tire Replacement tire 2% -2% e volume growth Europe Market volume growth Europe e Replacement tire volume Replacement tire volume -10% 1% growth North America growth North America H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 7
3) Automotive Group Key Performance Indicators in Q2 2019 Chassis & Safety Automotive Group Adj. EBIT 1 margin Sales (€ mn) Org. growth 6,814 6,978 6,652 6,689 6,762 6,411 2,384 -4.6% 7.0% (-190 bps YoY) › Ramp up of our integrated and compact MK C1 brake system Powertrain 557 553 357 368 Sales (€ mn) Org. growth Adj. EBIT 1 margin 1,961 -6.1% 3.7% (-210 bps YoY) › Weaker volume demand, especially in Europe and North America Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 › Adj. EBIT 1 margin excluding HEV >7% 1 Sales (€ mn) Adj. EBIT (€ mn) Interior Sales (€ mn) Org. growth Adj. EBIT 1 margin › Reported EBIT: €333 mn (4.9% of sales) 2,475 -3.7% 5.3% (-340 bps YoY) › R&D (net): €797 mn (11.8% of sales) › Lower than anticipated demand in Europe and China for certain › Capex: €480 mn (7.1% of sales) products, especially in the Instrumentation & Driver HMI business H1 2019 Results – August 7, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects EDMR – Equity and Debt Market Relations 8
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 8% 6% 5% 2% 0% -1% -1% -2% -3% -4% -4% -5% -5% -5% -6% -6% -7% -8% Q1/19 Q2/19 Q1/19 Q2/19 Q1/19 Q2/19 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Interior Chassis & Safety Powertrain Automotive Group PC & LT prod. growth ww H1 2019 Results – August 7, 2019 1 Passenger car and light truck <6 metric tons EDMR – Equity and Debt Market Relations 9
4) Rubber Group Key Performance Indicators in Q2 2019 Tires Rubber Group Sales (€ mn) Org. growth Adj. EBIT 1 margin 2,871 -1.2% 14.7% (-310 bps YoY) › Volume -1.9%; Price/Mix +0.6%, FX +1.1% 4,591 4,518 4,410 4,390 4,372 4,212 632 535 540 544 ContiTech Sales (€ mn) Org. growth Adj. EBIT 1 margin 1,677 -2.3% 8.1% (-10 bps YoY) Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 › Tepid vehicle production but supported by its industrial businesses 1 Sales (€ mn) Adj. EBIT (€ mn) › Reported EBIT: €463 mn (10.2% of sales) › R&D (net): €120 mn (2.7% of sales) › Capex: €288 mn (6.4% of sales) H1 2019 Results – August 7, 2019 1 Before amortization of intangibles from PPA, consolidation and special effects EDMR – Equity and Debt Market Relations 10
4) Rubber Group Tires Sales Transition (€ mn) Q2 2019 -1.2% org. growth 2,871 2,768 2,802 18 72 -52 31 +0.6% +1.1% -1.9% +2.5% rep. growth Sales Q2 2018 Volume Price/Mix Sales Q2 2019 FX Cons. Sales Q2 2019 before Cons. and FX H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 11
5) Indebtedness and Cash Flow Net Indebtedness Bridge (€ mn) 670 256 356 355 1,431 5,666 1,354 389 950 1,730 €1,282 mn outflow from change in working capital 1,661 31% Gearing 9% ratio 1 Net First-time Dividend 2018 Capex Acquisitions Change in Change in Change in Depr. and Other CF Net indebtedness adoption of inventories receivables payables amortization indebtedness (FY 2018) IFRS 16 (H1 2019) H1 2019 Results – August 7, 2019 1 According to cash flow statement including intangible assets EDMR – Equity and Debt Market Relations 12
5) Indebtedness and Cash Flow Free Cash Flow Before Acquisitions Excluding Carve- Out Effects (€ mn) in H1 2019 2018 2018 before acquisitions 2019 2019 before acquisitions 8 -662 2018 2018 before acquisitions 2019 2019 before acquisitions 1,468 -905 Carve-out €62 mn 806 296 -244 122 744 -609 -671 Carve-out -1,026 -1,171 €62 mn -1,345 -1,415 -1,769 Cash flow from Cash flow used Free cash flow operating activities for investing activities H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 13
5) Indebtedness and Cash Flow Net Indebtedness and Gearing Ratio 5,666 4,302 3,542 2,995 2,858 2,798 2,048 1,984 31% 1,661 27% 23% 19% 17% 17% 13% 12% 9% YE YE YE Q1 H1 9M YE Q1 H1 2015 2016 2017 2018 2019 Net indebtedness (€ mn) Gearing ratio H1 2019 Results – August 7, 2019 EDMR – Equity and Debt Market Relations 14
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