Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR http://www.continental-ir.com
Agenda 1 Corporation Highlights 2018 3 Opportunities and Challenges in 2019 2 8 3 Opportunities and Challenges in the Medium Term 14 4 2019 Outlook 20 Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 2 EDMR – Equity and Debt Market Relations
1) Corporation Highlights 2018 Most Important KPIs FY 2018 › Sales up by ~1% to ~€44.4 bn; organic sales growth at ~3% Adj. EBIT 1 totaled ~€4.1 bn; adj. EBIT 1 margin ~9.2% › › Free cash flow before acquisitions and US pension funding amounted to ~€1.8 bn › Net debt at ~€1.8 bn; gearing ratio below 15% at YE 2018 › Order intake in the Automotive Group totaling ~€40 bn Q4 2018 Corporation adj. EBIT 1 margin in Q4 2018 stood at ~9.7% › › Automotive Group organic sales growth about -2%, which is about 2%-points above global PC< production Automotive Group adj. EBIT 1 margin in Q4 2018 at ~7.4% › › Winter tire sales up 4%; overall tire volumes in Q4 2018 up by 1% despite challenging comparables; 1 Before amortization of intangibles from PPA, consolidation and special effects 2 Cash flow before financing activities and acquisitions divided by net income attributable to the shareholders of the parent Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 3 EDMR – Equity and Debt Market Relations
1) Corporation Highlights 2018 Sales and Adjusted EBIT 1 by Quarter FY Sales €40,549 mn FY Sales €44,009 mn FY Sales ~€44.4 bn Adj. EBIT 1 ~ €4.1 bn 11,374 11,284 11,250 ~ 11,033 11,013 11,000 10,788 10,693 10,524 10,191 9,984 9,851 1,313 1,164 1,167 1,161 1,104 ~ 1,100 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 Q4/18E 1 Sales (€ mn) Adj. EBIT (€ mn) 1 Before amortization of intangibles from PPA, consolidation and special effects. Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 4 EDMR – Equity and Debt Market Relations
1) Corporation Highlights 2018 Automotive Group and Rubber Group by Quarter Automotive Group Rubber Group 6,978 6,806 6,814 6,754 6,661 6,640 6,411 6,370 6,344 6,158 6,011 5,958 ~ 4,620 4,491 4,382 4,410 4,390 4,361 4,260 4,212 4,164 4,045 4,038 3,852 ~ 635 641 652 759 531 631 546 630 ~ 557 554 491 578 563 561 ~ 490 258 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18E Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18E 1 1 Sales (€ mn) Adj. EBIT (€ mn) Sales (€ mn) Adj. EBIT (€ mn) 1 Before amortization of intangibles from PPA, consolidation and special effects. Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 5 EDMR – Equity and Debt Market Relations
1) Corporation Highlights 2018 Automotive: About 4%-Points Growth above Market in FY 2018 Growth of organic sales vs. PC & LT 1 production Organic sales growth by division in 2018 12% 9% 8% 7% 6% 6% 5% 5% 4% 3% 2% 2% 1% 0% 0% -2% -2% -3% -4% -6% Q1/18 Q2/18 Q3/18 Q4/18E Q1 Q2 Q3 Q4E Q1 Q2 Q3 Q4E Q1 Q2 Q3 Q4E Automotive Group PC & LT prod. growth ww Chassis & Safety Powertrain Interior 1 Passenger car and light truck <6t. Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 6 EDMR – Equity and Debt Market Relations
1) Corporation Highlights 2018 CES Highlights 2019 CES 2019 Innovation Honoree Award – Continental Develops Global 5G-Hybrid-V2X Solution and Wins First Series Project Intelligent Door System With this enhancement of the intelligent door, The technology company Continental is developing a Continental is providing drivers with their very flexible 5G hybrid platform that allows both: mobile own “doorkeeper,” ensuring that drivers can network communication, and rapid and reliable direct get in and out of their vehicle safely and exchange of data. These benefits are being realized comfortably. Sensors monitoring traffic from with a first customer award for this 5G-Hybrid-V2X the side prevent damage to doors, while Assist solution. mode makes opening and closing the door Go to press release easier and holds it securely in the desired Smart cities – City Data as a Service position, even on a slope. The system received Go to press release Digitalization enables mobility-related data from a CES Innovation Award for “Vehicle connected vehicles, smartphones and infrastructure to be Intelligence and Self- Driving Technology”. harnessed to meet dynamic urban mobility requirements. At the core of Continental’s smart city offerings lies the Waveguide Head-up Display data platform City Data as a Service, which not only With its latest innovation in head-up displays, stores and processes data, but creates real added value Continental has provided a solution to the through data analysis and the application of artificial size problem of augmented reality head-up intelligence. At CES 2019, Continental is showcasing displays and made them compatible with different solutions based on the City Data as a Service vehicles. This enables augmentations in a Go to press release platform such as: 2.6 m x 0.87 m range over a projection - fleet management, distance of 10 m – and the device itself has Go to press release - intelligent streetlamp and been reduced in size by ~1/3. - intelligent intersection. Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 7 EDMR – Equity and Debt Market Relations
2) Opportunities and Challenges in 2019 2019 › German and European PC & LT production still impacted by WLTP › North America PC & LT production expected to stabilize on high level › Chinese PC & LT production expected to slightly decrease › ContiTech: Further Stabilization of Oil and Mining-Related Sectors › Tire start-up new factories Medium Term › Rising demand vs. rather stable tire capex › Margin enhancement program in ContiTech › Order backlog supports Automotive Group growth › Rising R&D expenses in Automotive, a consequence of successfully transforming the business towards electronics and software › High growth combined with continuous investment in R&D will limit operating leverage in the next 12-18 month › Regional sales and customer mix becoming more balanced Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 8 EDMR – Equity and Debt Market Relations
2) Opportunities and Challenges in 2019 German and European PC & LT 1 Production Still Impacted by WLTP PC & LT 1 Production (mn units) – Europe › Opportunities [22.6E] 2 › WLTP impacted H2 18 significantly; 22.1 21.8 21.8 21.8 21.4 20.6 20.8 20.0 19.9 issues should persist in H1 2019 19.0 19.2 18.8 16.3 › Increase of production in H2 2019 possible › Challenges › German car production amounts to approx. 30% of Development in Germany during 2018 (YoY) European car production 101% 94% 90% › 80% German production expected to stabilize during 2019 on the level of 2018 only › Import tariffs could impact exports Q1 Q2 Q3 Q4E 1 Passenger car and light truck (<6t); source: IHS and own estimates LV production 2 IHS estimate in December 2017 Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 9 EDMR – Equity and Debt Market Relations
2) Opportunities and Challenges in 2019 North American PC & LT 1 Production Expected to Stabilize on High Level PC & LT 1 Production (mn units) – North America › Opportunities › Vehicle demand should benefit from economic 17.8 17.5 17.0 17.1 16.9 16.9 16.2 15.4 growth 15.1 13.1 12.6 11.9 › Trade deals could trigger pent-up demand 8.6 › Challenges › Lower Bank Rates Boosted Auto Loans in the U.S. 2 80% of car sales are financed % $ bn › Rising interest rates might impact demand 8 1,250 1,000 6 › Trade tensions might impact in- and exports of 750 4 500 PC & LT 1 2 250 0 0 1 Passenger car and light truck (<6t); source: IHS and own estimates U.S. Auto Loans 60M New Car Bank Rate 2 Source: Fed data via Bloomberg Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 10 EDMR – Equity and Debt Market Relations
2) Opportunities and Challenges in 2019 Chinese PC & LT 1 Production Expected to Decrease Slightly PC & LT 1 Production (mn units) – China › Opportunities › Incentives could help demand 27.7 27.1 27.0 26.1 23.7 22.6 20.9 › Overall car park still at a low level 18.2 17.3 16.8 (PC</1’000 people of ~170 vs. ~670 in Germany, 12.8 ~600 in Japan and ~800 in the U.S.) 8.1 8.6 › Demand for EV ´ s rising strongly › Challenges Development in China during 2018 (YoY) › Chinese GDP growth slowing further 110% 98% 92% 90% › High inventories will burden production in H1 2019 › Trade tensions might dampen trade and demand › Shift of production towards EV ´ s due to consumer ´ s regulatory changes Q1 Q2 Q3 Q4E 1 Passenger car and light truck (<6t); source: IHS and own estimates LV production Preliminary Figures for Fiscal 2018 and Outlook 2019 January 2019 11 EDMR – Equity and Debt Market Relations
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