Update on Growth Strategy June 2016 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR Wolfgang Schaefer – CFO http://www.continental-ir.com
AGENDA 1 Automotive Group – Well Positioned for Future Trends 3 2 Tires – Update on Strategy 2025 8 3 ContiTech – To Benefit From Recovery of Oil and Mining Businesses 13 4 Outlook 2020 17 Update on Growth Strategy June 2016 2 EDMR – Equity and Debt Markets Relations
1) Automotive Group Digitalization, Electrification and Mobility Services Digitalization Electric Mobility Mobility Services Continental's view/position: Continental's view/position: Continental's view/position: › FEV 2 sales to account for 2% of › Market for automated driving 1 is › Market for mobility services is global car production by 2020 forecasted to exceed €57 bn forecasted to exceed €25 bn by 2020 by 2020 › Demand for FEV 2 will be determined by the cost, life-time, › Conti founded new Intelligent › 60% of our Automotive Group range and charging time of the Transportation Services (ITS) sales in 2015 are derived from battery business unit in 2014 sensors, electronics or software products › Conti has invested more than › First applications include €1 bn in electric mobility to date eHorizon and Road Database › Vision Zero accidents achievable All medium-term mobility scenarios still foresee tires on vehicles Update on Growth Strategy 1 Goldman Sachs Report, Cars 2025: Vol. 3 (Sept 2015) 2 FEV = Full Electric Vehicle June 2016 3 EDMR – Equity and Debt Markets Relations
1) Automotive Group Digitalization Software - Continental Elektrobit - Software Domain Control Unit Flash-Lidar Driver Awareness Stereo Camera Car2x - MK2xPro Surround View Driver HMI Short / Long Range Radar Antenna Module Powertrain Management Backend Services Fail Operational Brake Update on Growth Strategy June 2016 4 EDMR – Equity and Debt Markets Relations
1) Automotive Group Electrification – Relative Value of Continental’s Content 1 Gasoline-related Diesel-related HEV-related FEV-related business business business business 100% 1 160% 160-260% 300% › Engine management › Engine management › Engine management › High voltage axle drive systems for solenoid systems for diesel piezo systems (gasoline/diesel) › Power electronics direct injection (injector, common rail injection › Exhaust aftertreatment ECU, pressure pumps) (injector, ECUs, › Battery management pressure pumps) › Sensors and actuators systems › Exhaust aftertreatment › Exhaust aftertreatment › Turbochargers › Inverters and DC/DC › Sensors and actuators converters and › Sensors and actuators › Turbochargers › 48V solutions › Electric water pumps or › Plug-in hybrid solutions Well positioned in all key technologies Update on Growth Strategy 1 Value of gasoline content per car is indexed at 100%; all other values June 2016 are relative to the gasoline content 5 EDMR – Equity and Debt Markets Relations
1) Automotive Group Mobility Services Continental Backend Platform (for eHorizon, Road Database,…) Vehicle to Backend Vehicle to Infrastructure Communication Communication Vehicle to Vehicle Communication Improved prediction of Communication broadens the horizon road events and road conditions of the on-board surrounding sensors Relevant market of more than €57 bn by 2020 Update on Growth Strategy June 2016 6 EDMR – Equity and Debt Markets Relations
1) Automotive Group Order Intake Confirms Mid Term Target 30 30 30 26 25 23.6 23 20.9 20.0 19.5 19 18.4 15.9 2010 2011 2012 2013 2014 2015 2019E 1 Automotive Group Sales Order Intake (LTS) 1 Life-time sales = Sum of expected future sales of all newly received orders Update on Growth Strategy June 2016 7 EDMR – Equity and Debt Markets Relations
2) Tires Update on Strategy 2025 2 1 3 Stage 2: 2011 – 2015 Stage 1: 2001 – 2010 Stage 3: 2016 – 2025 Sustain Value Create Value Enhance Value › Accelerated global growth › Global footprint and business › Balance the global footprint (focus BRIC countries) optimized › Benefit from excellent cost › Leverage cost position › Strong cost focus position › Improved technology position › Global presence of CVT › Achieve podium position in to establish among sustained (SA/APAC) technology worldwide “Best In Class” › Turnaround of PLT business › Improve brand awareness in NAFTA region succeeded further › Worldwide technology gap to › Rank among the top 3 competition closed globally Continuous value creation is our driving force! Update on Growth Strategy June 2016 8 EDMR – Equity and Debt Markets Relations
2) Tires Balanced Global Manufacturing Footprint 100% APAC Local sourcing Americas at lowest 75% landed cost 50% EMEA Leverage 25% costs 0% 2010 2015 2025 target 2025 Local sourcing at competitive landed cost Update on Growth Strategy June 2016 9 EDMR – Equity and Debt Markets Relations
2) Tires Technological Leadership HP tires and winter tires ww SD tires 100% 29 80% 60% Non-OE OE 40% 47% 20% Top position in tire tests 39% 71 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2010 2015 Constant mix improvement High OE share proves Technological leadership demonstrates Continental’s Continental’s capabilities as testified by multiple wins in leading position in consumer partner for leading car brands summer and winter tire perception consumer tests 2025 Achieve podium position in technology worldwide Update on Growth Strategy June 2016 10 EDMR – Equity and Debt Markets Relations
2) Tires Further Improvement of Brand Awareness 70% 90% 50% 80% 70% 30% 65% 2010 2015 2025 target 50% 2010 2015 2025 75% 40% target 50% 2010 2015 2025 target 10% 80% 65% 2010 2015 2025 target 75% 25% 59% 2010 2015 2025 38% target 2025 +15% increase in awareness supports sales growth 2010 2015 2025 target Update on Growth Strategy June 2016 11 EDMR – Equity and Debt Markets Relations
2) Tires Drive Global Growth (mn units) 120 80 EMEA Americas 40 APAC 0 2010 2015 2025 target 2025 Growth to outperform global market development 2 1 3 Update on Growth Strategy June 2016 12 EDMR – Equity and Debt Markets Relations
3) ContiTech Strong Track Record of Acquiring and Integrating Businesses Parker Hannifin’s automotive air conditioning business and Veyance Freudenberg Sealing Matador Rubber s.r.o., Technologies Inc., USA Technologies GmbH Rubber products Slovakia Combined sales: ~€180 mn Conveyor belts Sales: ~€1.3 bn Sales: ~€30 mn Legg Company Inc., USA and Metso Corp., Phoenix AG, Germany Finland Rubber products Conveyor belts Sales: ~€1.0 bn Tianjin Xinbinhai Combined sales: Conveyor Belt Co., ~€60 mn China and Mining Industrial Resource Supplies Pty Ltd., 5,368 Roulunds A/S, Denmark Australia Transmission belts Combined sales: Sales: ~€45 mn ~€15 mn 3,931 3,878 3,712 3,583 3,095 3,064 3,007 2,894 2,869 2,406 2,063 12% 12% 12% 12% 12% 11% 11% 11% 1,359 7% 7% 6% 3% 10.5% 1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Reported EBIT margin ContiTech sales ( € mn) Update on Growth Strategy All sales of acquisitions shown are pro forma sales in the year of the June 2016 acquisition 13 EDMR – Equity and Debt Markets Relations 1 Before amortization of intangibles from PPA, consolidation and special effects; reported EBIT margin 7%
3) ContiTech Top 10 Non-Tire Rubber Companies Top 10 Non-Tire Rubber Companies worldwide – 2015 Sales (bn €) 6,000 5,000 4,000 3,000 2,000 1,000 0 Bridgestone (Seals and vibration (Fluid connectors and ContiTech Hutchinson Corporation Standard (Seal business) (excl. wheel business) Sumitomo Riko (Diversified Cooper engineered systems) Products) Parker-Hannifin Freudenberg Gates control tech.) Trelleborg AB NOK Source: Company filings; revenues for Gates and Parker Hannifin are estimates Update on Growth Strategy June 2016 14 EDMR – Equity and Debt Markets Relations
3) ContiTech A Truly Global Player › LTM sales Q1 16: €5.46 bn Fluid Technology 1 39% › Employees (March 31, 2016): 42,501 › 194 locations in 44 countries Conveyor Belt › 35 R&D locations worldwide Group 19% Elastomer Share of sales › Sales 2015 by market Coatings 2015 in % › Europe 2% 49% › NAFTA 26% Compounding Technology › Asia 17% 4% › Other countries 8% Power Vibration Transmission Control Group 7% 12% Air Spring Benecke-Kaliko Systems Group 7% 10% 1 Since 2016 divided in: Mobile Fluid Systems and Industrial Fluid Systems Update on Growth Strategy June 2016 15 EDMR – Equity and Debt Markets Relations
3) ContiTech Relevant Market Offers Attractive Growth Opportunities Σ~ €50 bn Σ~ €42 bn 9 Compounding Technology 9 8 Elastomer Coatings 8 7 6 7 Air Spring Systems 5 6 Power Transmission Group 4 5 Vibration Control 3 4 Conveyor Belt Group 3 Benecke-Kaliko Group 2 2 Industrial Fluid Systems 1 1 Mobile Fluid Systems 2015 2020 Balanced portfolio of OE Automotive and Non-OE Automotive businesses Update on Growth Strategy Source: Market data and Continental estimates . June 2016 1 Since 2016, the Fluid Technology business unit has been organized as 16 EDMR – Equity and Debt Markets Relations the Mobile Fluid Systems and Industrial Fluid Systems business units
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