Roadshow Presentation August/September 2018 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR http://www.continental-ir.com
Agenda 1 Realignment of Continental 3 2 Corporation Highlights 10 3 Automotive Group 18 4 Rubber Group 21 5 Indebtedness and Cash Flow 26 6 Outlook 2018 29 7 Back-up and 2016 – H1 2018 Fact Sheets 38 Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 2
1) Realignment of Continental At the Forefront to Capitalize on Rapidly Changing Market Environment Continental pole positioned to …however, it faces challenges due capitalize on megatrends… to traditional structure Leading large-scale global supplier Complexity, agility Hidden value of individual businesses Pioneer in technological innovation Chassis & Safety Diversification provides resilience Interior Funding flexibility Powertrain through the economic cycles Tires ContiTech Strong cash generation capabilities Competition for capital across to fund growth divisions Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 3
1) Realignment of Continental At the Forefront to Capitalize on Rapidly Changing Market Environment Implementation of holding concept Corporate development since 2000 › Create a more agile group Sales of independent business > €65 bn sectors 44 › Tackle different market challenges and Employees technological disruption of 236 (in thousands) Powertrain by transforming it into a group of 527 Companies independent legal entities and IPO › Reorganize Automotive Group with focus on 2000 2017 2025E further increase in knowledge sharing and Sales in € bn Number of companies Number of employees leverage R&D capabilities Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 4
1) Realignment of Continental Transformation of Existing Organization – Holding Concept › Ensure long-term competitiveness and From 2020 onwards increase strategic flexibility › Maintain a strong network with common Continental Group values › Maintain focus on most efficient value creation Continental Continental Powertrain Automotive Rubber company › Take into account interests of all stakeholders Autonomous Vehicle Tire Driving Networking ContiTech Technologies Technologies Technologies Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 5
1) Realignment of Continental Transformation of Existing Organization – Powertrain IPO Advantages Industry challenges Context › Expansion of strong position as a › More focused management › Over the next 15-20 years, the leading global system supplier of transformation of the automotive › Adaptation of structure and drivetrain technologies for ICE, hybrid or industry will cause the biggest changes processes to the specific business full electric drivetrains in the Powertrain business needs › Future prospects e.g. driven by strong › Powertrain is most affected by the › Generation of capital beyond the order book uncertainties regarding when and to operative cash flow of the division what extent those changes may occur › Allows investors a more targeted capital › More tailored investments into future › Powertrain requires the highest level of allocation technologies in addition to the internal flexibility and responsiveness to adapt › Full support of employees backed by combustion engine to changing market demands the framework paper › Potential for suitable powertrain co- operations projects beyond Continental Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 6
1) Realignment of Continental Powertrain Sales (€ bn) › Transformation of the Powertrain division into an independent 7.7 7.7 group of legal entities with new management by the start of 2019 4.7 › Andreas Wolf is to assume responsibility as CEO starting 2019 › New Powertrain will contain whole range of combustion engine business, all hybrid and electric drive systems as well as all current battery activities 1 2010 2017 LTM Global PC & LT 2 Production CAGR 4% Hybrid Electric Sensors & Fuel & Exhaust Engine Systems Transmission Vehicle Actuators Management Order Intake LTS 3 (€ bn) Engine management Transmission control Actuators for Power electronics Fuel delivery modules passenger cars units for automatic › Thermal management › Diesel piezo common rail injection transmissions › Electric pumps › Gasoline direct and port fuel › Step-AT, DCT, CVT, DHT, AMT Electric motors Fuel level sensors › Electric throttle injection › Exhaust and emission Transmission actuators › Alternative fuels › General purpose 15.0 › Clutch, gearshift Electric axle drive Fuel pumps › Exhaust gas after-treatment 13.4 Transmission sensors Exhaust and Engine management Electronics for fuel pump › Sensorcluster 48V power electronics emission sensors for 11.5 commercial vehicles control › Exhaust gas › Diesel piezo common rail injection › Standalone & flange integrated Electric transmission oil pumps › Fluids: Oil level, fuel, UREA 48V drives › Exhaust gas after-treatment › Temperature Fluid level sensor with sealed Engine management Shift-by-wire and ePark contact system Engine and non-automotive solutions Battery management systems transmission sensors Exhaust aftertreatment Turbocharger Micromobility electric drivetrains › Mass airflow › Catalysts and filters › Pedelec drive unit Electrification and Power net systems › Combustion › Electronics e-mobility › Position › SCR Urea extraction unit › On-board high voltage battery › Pressure charger Water delivery module › Wireless power transfer system Vehicle access sensors › Electric vehicle control units 1 2016 2017 LTM 1 LTM = Last twelve months Roadshow Presentation 2 Passenger car and light truck production August/September 2018 3 LTS = Life time sales EDMR - Equity and Debt Market Relations 7
1) Realignment of Continental Continental Automotive Sales (€ bn) › Reorganize into business areas 30 ~ Autonomous Driving Technologies and 19 Vehicle Networking Technologies › Create strong central Automotive R&D function with up to 15,000 engineers 2017 2023 › Leverage R&D know-how for all advanced development and application TAM 1 in 2025 (€ bn) engineering and ensure the sharing of knowledge and best practices › Increase adoption of best practice Continental standards Automotive Continental › In total, ADT and VNT can rely on more Automotive than 30,000 engineers to drive the change >€150 bn in autonomous driving and holistic Others Autonomous Vehicle Central connectivity Driving Networking Automotive Technologies Technologies R&D 1 TAM: Total addressable market for Automated Driving and Holistic Connectivity Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 8
1) Realignment of Continental Target Timeline Early Mid Early July 2018 2019 2019 2020 › Realignment of › Powertrain carve- › Powertrain IPO › Realignment of group structure out completed possibly starting mid- group structure approved by Operating costs 2019 fully implemented Supervisory amount to €350 mn › Announcement of › Rubber IPO remains board on July 26 Tax damage details of the an option for the amounts to €100 mn realignment of the future new “Continental Automotive” Continental Automotive Autonomous Vehicle Central Driving Networking Automotive Technologies Technologies R&D Roadshow Presentation August/September 2018 EDMR - Equity and Debt Market Relations 9
2) Corporation Highlights Most Important KPIs for H1 2018 › Sales up to €22.4 bn ; organic sales growth at 5.4%; FX negative at €932 mn Adj. EBIT 1 down by 5% to €2.2 bn ; adj. EBIT 1 margin at 10.0% › (PPA 2 -€85 mn and special effects -€1 mn) NIAT 3 amounted to €1.56 bn, up by 4% › › Free cash flow amounted to €122 mn Free cash flow before acquisitions amounted to €296 mn › Gearing ratio at 17% and equity ratio at 43% Value creation: trailing ROCE 4 down slightly to 19.4% › › Other topics: › Order intake in the Automotive Group increased to more than €20 bn in H1 2018 › €750 mn bond with a coupon of 3.0% p.a. was meanwhile redeemed at maturity on July 16, 2018 › About €165 mn cash out net of taxes for funding most US pension plans › Special effect 2018: About €160 mn positive in Interior, attributable to newly founded OSRAM Continental GmbH 1 Before amortization of intangibles from PPA, consolidation and special effects. Roadshow Presentation 2 Amortization of intangibles from PPA. 3 Attributable to the shareholders of the parent. August/September 2018 4 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by average operating assets for the LTM. EDMR - Equity and Debt Market Relations 10
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