Slide 1: Preliminary Results for FY 2019
Preliminary Results for FY 2019 Hanover – March 5, 2020 Ticker: CON ADR-Ticker: CTTAY http://www.continental-ir.com Wolfgang Schaefer – CFO
Slide 2: Agenda
Agenda 1 Current Market Situation 3 2 Corporation Highlights 4 3 Automotive 8 4 Rubber 10 5 Cash Flow, Indebtedness and Dividend 12 6 Outlook 2020 15 Back-up and Fact Sheets 2017 – 2019 27 Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG 2
Slide 3: Continental Transformation Progressing Under Challenging Conditions
1 | Current Market Situation Continental Transformation Progressing Under Challenging Conditions Review 2019 Challenges 2020 Continental moving forward › Global PC<1 production -6% YoY › Continued headwinds from: › Automotive: New organization ▪ Weakness in key German and U.S. ▪ Difficult market c
Slide 4: Order Intake in the Automotive Group of Around €33 bn in 2019
2 | Corporation Highlights Order Intake (LTS1) in the Automotive Group of Around €33 bn in 2019 Chassis & Safety Powertrain Interior › Around €4 bn in ADAS, thereof: › HEV order intake at ~€1.8 bn › Transition from analog to digital ▪ ~20% ADCU › Underlying business (i.e. ECUs, clusters sensors, etc
Slide 5: Update on Current Structural Program
2 | Corporation Highlights Update on Current Structural Program Performance and Cost Management Footprint Portfolio Labor force adaption; variable headcount Implementation underway at multiple Interior: Sale of 50% stake in SAS JV down 4.6% YoY in Automotive1 locations in all divisions Power
Slide 6: Most Important KPIs for FY 2019
2 | Corporation Highlights Most Important KPIs for FY 2019 FY 2018 FY 2019 Delta Comments Sales €44.4 bn €44.5 bn +0.2% Organic growth -2.6%; FX +€648 mn Adj. EBIT1 €4.1 bn €3.2 bn -21.5% Adj. EBIT1 margin 9.3% 7.4% -190 bps PPA2 -€173 mn -€183 mn Special effects €80 mn -€3.3 bn Non-cash impairment
Slide 7: Sales and Adjusted EBIT by Quarter
2 | Corporation Highlights Sales and Adjusted EBIT1 by Quarter FY Sales €44,009 mn FY Sales €44,404 mn FY Sales €44,478 mn Adj. EBIT1 €4,117 mn Adj. EBIT1 €3,234 mn 11,284 11,374 11,230 11,264 11,103 11,000 11,033 11,013 10,788 11,047 11,064 10,693 1,066 1,155 1,127 884 868 867 769 615 Q1/17 Q2/17 Q
Slide 8: Automotive Key Performance Indicators in Q4 2019
3 | Automotive Key Performance Indicators in Q4 2019 Automotive Group Chassis & Safety Sales (€ mn) Org. growth Adj. EBIT1 margin 6,814 6,978 6,652 6,689 6,762 6,555 6,518 6,411 2,349 -2.9% 9.0% (+50 bps YoY) › Lower in Germany and U.S.; positive ADAS and Passive Safety › Resilient margins in ADAS a
Slide 9: Outperformance of PC & LT Production by 2%-Points in 2019
3 | Automotive Outperformance of PC & LT1 Production by 2%-Points in 2019 Growth of organic sales vs. PC & LT1 production 8% Organic sales growth by division 6% 5% 2% 0% 1% 0% 0% -1% 0% -1% -3% -2% -3% -4% -4% -3% -5% -4% -4% -4% -6% -5% -5% -6% -6% -7% -8% Q1/19 Q2/19 Q3/19 Q4/19 Q1/19 Q2/19 Q3/19
Slide 10: Rubber Key Performance Indicators in Q4 2019
4 | Rubber Key Performance Indicators in Q4 2019 Rubber Group Tires Sales (€ mn) Org. growth Adj. EBIT1 margin 3,036 -3.7% 15.3% (-270 bps YoY) 4,591 4,561 4,562 4,518 4,410 4,390 4,372 › Warm weather impacted winter tire sales volume 4,212 › Lower PC< and CV production in Europe and North America
Slide 11: Tires Sales Bridge Q4 2019
4 | Rubber Tires Sales Bridge Q4 2019 -3.7% org. (€mn) -4.1% +1.2% +1.6% +0.5% -0.9% rep. Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG 11
Slide 12: Free Cash Flow Before Acquisitions
5 | Cash Flow, Indebtedness and Dividend Free Cash Flow Before Acquisitions (€mn) 2018 2018 before acquisitions 2019 2019 before acquisitions 4,508 5,145 4,977 4,414 Pension Carve-out Pension funding €94 mn funding €167mn €167mn 1,936 1,343 1,769 Carve-out 1,249 1,351 4,977 €94 mn 4,414 43 762 1,769
Slide 13: Net Indebtedness Bridge
5 | Cash Flow, Indebtedness and Dividend Net Indebtedness Bridge (€mn) 545 49 1,012 488 338 3,220 950 1,730 €256 mn outflow from 4,072 change in working capital 5,246 1,661 26% 9% Gearing ratio Net First time Dividend Capex 1 Acquisitions Other CF Change in Change in Change in Depr. and Net indebted
Slide 14: History of Dividend Per Share
5 | Cash Flow, Indebtedness and Dividend History of Dividend Per Share (€)1 +6% 4,75 +6% 4,50 -16% +13% 4,25 2 4,00 +15% 3,75 +30% 3,25 +11% 2,50 2,25 2012 2013 2014 2015 2016 2017 2018 2019 Preliminary FY 2019 Results - March 5, 2020 1 Dividend paid for the respective fiscal year, payout in the sub
Slide 15: 2020 Outlook: Current Market Assumptions
6 | 2020 Outlook: Current Market Assumptions Vehicle Production Replacement Tires Passenger Cars Commercial Passenger Cars Commercial & Light Trucks Vehicles & Light Trucks Vehicles 2019 2020E 2019 2020E 2019 2020E 2019 2020E Europe -4% -3% to -5% -9% -5% to -15% -2% 0% to -1% 1% -1% to 1% North Ame
Slide 16: 2020 Outlook: Sales Bridge
6 | 2020 Outlook: Continental Sales Bridge1 (€bn) Details 44.5 Around Market 42.5 – 44.5 › (-) PC< and CV production › (-) Negative replacement tire market › (-) Tires OE pricing › (-) Challenging industrial and aftermarket 26.5 Around Outperformance 25.5 – 26.5 › (+) Auto: Content growth › (+) Ru
Slide 17: 2020 Outlook: Adjusted EBIT Margin Bridge
6 | 2020 Outlook: Continental Adjusted EBIT Margin Bridge1 Details 7.4% Market › (-) PC< and CV production › (-) Negative replacement tire market Around › (-) Tires OE pricing 4.4% 5.5% – 6.5% › (-) Challenging industrial and aftermarket Around Outperformance 3% – 4% › (+) Auto: Content growth › (
Slide 18: 2020 Outlook: Free Cash Flow Bridge
6 | 2020 Outlook: Continental Free Cash Flow Bridge1 (Before Acquisitions And Carve-Out Effects) (€bn) Details Operating Cash Flow › (-) Lower EBIT › (-) Cash outflow for warranty 1.3 › (-) Cash outflow for restructuring Around › (+) Working capital optimization 0.7 – 1.1 Investing Cash Flow › (+) C
Slide 19: 2020 Outlook: Continental
6 | 2020 Outlook: Continental 2019 2020E (at constant FX) Consolidated sales €44.5 bn About €42.5 bn – €44.5 bn Adj. EBIT1 margin 7.4% About 5.5% – 6.5% Automotive sales €26.5 bn About €25.5 bn – €26.5 bn Adj. EBIT1 margin 4.4% About 3% – 4% Rubber sales €18.0 bn About €17 bn – €18 bn Adj. EBIT1 mar
Slide 20: Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG
Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG 20
Slide 21: Disclaimer
Disclaimer › This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the Annual Press Conference and the Analyst and Investor Call on March 5, 2020, and the subsequent road shows. It has not been independently verified. It does not constitute an offer, invitat
Slide 22: Contact
Contact Equity and Debt Markets Relations Vahrenwalder Str. 9 e-mail: ir@conti.de 30165 Hanover Fax: +49 511 938-1080 Germany www.continental-ir.com Bernard Wang Phone: +49 511 938-1068 Michael Saemann Phone: +49 511 938-1307 Head of IR e-mail: bernard.wang@conti.de Analysts, Institutional Investors
Slide 23: Continental Financial Calendar
Continental Financial Calendar 2020 Annual Financial Press Conference March 5, 2020 Capital Market Day of Vitesco Technologies March 23, 2020 Annual Shareholders’ Meeting (incl. key data for Q1 2020) April 30, 2020 Q1 Financial Report May 7, 2020 Capital Market Days of Continental June 3 and 4, 2020
Slide 24: Continental Share Data/ADR Data
Continental Share Data/ADR Data Share Data ADR Data Type of share No-par value share Ratio 1:10 (ordinary share : ADRs)1 Bloomberg Ticker CON Bloomberg Ticker CTTAY Reuters Ticker CONG Reuters Ticker CTTAY.PK German Security Identification Number (WKN) 543 900 ISIN US2107712000 ISIN DE0005439004 ADR
Slide 25: Continental Bond Data
Continental Bond Data5 Issuer Continental AG Issue Senior Notes Principal amount €600 mn €750 mn €200 mn €500 mn €100 mn €600 mn Offering price 99.410% 99.228% 100.1524% 99.804% 100% 99.802% Ba1 (Moody’s) Rating BBB+ (S&P) Baa1 (Moody’s) Baa1 (Moody’s) Baa1 (Moody’s) Baa1 (Moody’s) BB (S&P) at issue
Slide 26: Back-up
Back-up Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG 26
Slide 27: Continental Group Structure, Effective January 1, 2020
Back-up Continental Group Structure, Effective January 1, 2020 Continental Group Group Sectors Automotive Technologies Rubber Technologies Powertrain Technologies Vehicle Autonomous Networking Mobility and Business Areas and Tires ContiTech Vitesco Technologies Safety Information (AMS) (VNI) Prelimi
Slide 28: Corporation Highlights FY 2019
Back-up Corporation Highlights FY 2019 › Sales Increase of 0.2% to €44,478.4 mn (PY: €44,404.4 mn); organic sales down 2.6% › EBITDA Decrease of 20.2% to €4,977.2 mn (PY: €6,235.7 mn) › EBIT Decrease of 106.7% to -€268.3 mn (PY: €4,027.7 mn); Decrease in adj. EBIT1 to €3,233.9 mn (7.4% adj. EBIT1 ma
Slide 29: Changes from the adoption of IFRS 16, Leases
Back-up Changes from the adoption of IFRS 16, Leases, as at December 31, 20191 Area Value Explanation Consolidated Statement of Income EBIT +€32 mn Positive impact on EBIT Financial result -€32 mn Negative impact on financial result Consolidated Statement of Financial Position As of December 31, 201
Slide 30: Sustainable Value Creation
Back-up Sustainable Value Creation 20.0% 19.0% 20.6% 20.6% 19.8% 26,119 19.4% 26,179 18.3% 17.0% 15.5% 13.5% 2.5% -1.0% 20,978 21,401 21,886 22,172 22,397 23,256 23,641 24,740 22,811 25,764 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 1 2 1 Trailing OA (€ mn) Trailing ROCE Trailing operating a
Slide 31: Sales by Markets
Back-up Sales by Markets Automotive Group 2019 Rubber Group 2019 Corporation 2019 €26,523 mn €18,013 mn €44,478 mn Other Other Other countries countries markets 1% 6% Germany 3% Germany Germany 15% 19% 21% Asia Asia Asia 27% 15% 22% Europe Europe (ex (ex Europe Germany) Germany) North (ex NAFTA NAFT
Slide 32: EBITDA by Division
Back-up EBITDA by Division Automotive Group 2019 Rubber Group 2019 Corporation 2019 €1,920 mn €3,168 mn €4,977 mn Interior ContiTech ContiTech Chassis 30% 13% 21% & Safety 23% Powertrain 4% Interior Powertrain 11% 10% Tires Chassis 79% & Safety Tires 60% 49% Preliminary FY 2019 Results - March 5, 20
Slide 33: Capex 2017 – 2019
Back-up Capex 2017 – 2019 Capex by Division 2017 – 2019 (€ mn) Capex Distribution by Division 2017 – 2019 C&S PT I Tires CT C&S PT I Tires CT 262 250 213 7% 8% 8% 837 926 847 30% 27% 28% 578 684 453 16% 19% 21% 654 691 658 23% 22% 20% 683 750 721 24% 24% 22% 2017 2018 2019 2017 2018 2019 Preliminary
Slide 34: Breakdown of Capex, Depreciation and Earnings per Share FY 2019
Back-up Breakdown of Capex, Depreciation and Earnings per Share FY 2019 Capex, Depreciation and PPA1 (€ mn) EPS ex PPA1,2 (€) 0.66 5,063 3,124 3,309 2,854 7.0% 7.4% 6.5% 2,035 1,947 171 173 183 2017 2018 2019 -6.13 -5.47 Capex (PPE), percentage of sales 1 Depreciation, w/o PPA PPA 1 EPS reported PPA
Slide 35: Strong Balance Sheet
Back-up Strong Balance Sheet Leverage ratio1 Gearing ratio2 Equity ratio3 0.62 44% 45% 0.23 0.19 26% 37% 13% 9% FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 Continental’s current credit rating is: Continental’s targets: › Fitch (since October 24, 2016): BBB+, outlook stabl
Slide 36: Cash Flow Overview
Back-up Cash Flow Overview Cash Flow 2019 by Quarter (€ mn) Q1 Q2 Q3 Q4 2,588 1,583 1,512 1,083 746 337 275 -2 -36 -262 -635 -761 -763 -807 -1,008 -1,076 Cash flow from Cash flow used Free cash flow Free cash operating activities for investing activities flow before acquisitions Preliminary FY 2019
Slide 37: Indebtedness
Back-up Indebtedness As at December 31, 2019 (€ mn) FY 18 FY 19 Gross indebtedness 4,607 7,619 Cash 2,761 3,342 Net indebtedness 1,661 4,072 Available credit lines 3,504 4,702 Total liquidity 6,266 8,044 Net Indebtedness and Gearing Ratio Maturities of Publicly Traded Bonds1 (€ mn) 3,542 4,072 2,798
Slide 38: Gross Indebtedness by Source at YE 2019
Back-up Gross Indebtedness by Source at YE 2019 (€ mn) Bond 2 Bond 2 Feb. 2020 Sept. 2020 (0.0%) (3.125%) 600 2 › Gross indebtedness 750 Bond Apr. 2021 €7,619 mn (EURIBOR+0.50%) Other 200 (PY: €4,607 mn) indebtedness 2 3,348 Bond › Cash Bonds 37%1 Sept. 2023 €3,342 mn Various other (0.0%) 500 (PY: €
Slide 39: Key Historical Credit Metrics
Back-up Key Historical Credit Metrics (€ mn)1 2015 2016 2017 2018 6 2019 Statement of Cash Flows Adjusted EBITDA2 6,094 6,125 6,701 6,190 5,837 Reported EBITDA 6,001 6,057 6,679 6,236 4,977 Net cash interest paid -174 -112 -105 -91 -83 Tax paid -1,015 -1,047 -1,122 -848 -866 Change in net working ca
Slide 40: Automotive Group Financials – Chassis & Safety
Back-up Automotive Group Financials – Chassis & Safety › Sales decreased 4.2% before Chassis & Safety FY 2019 consolidation and FX effects Sales (€ mn) EBITDA margin Adj. EBIT 1 margin › EBITDA decreased €68.0 mn to €1,145.3 mn (-5.6%) 9,768 9,588 9,382 › Adj. EBIT1 decreased €109.4 mn to €675.9 mn
Slide 41: Automotive Group Financials – Powertrain
Back-up Automotive Group Financials – Powertrain › Sales decreased 2.5% before Powertrain FY 2019 consolidation and FX effects 1 Sales (€ mn) EBITDA margin Adj. EBIT margin › EBITDA decreased €382.1 mn to €192.5 mn (-66.5%) › Adj. EBIT1 decreased €163.1 mn to €57.0 mn 7,661 7,802 7,741 (adj. EBIT1 m
Slide 42: Automotive Group Financials – Interior
Back-up Automotive Group Financials – Interior › Sales decreased 2.5% before Interior FY 2019 consolidation and FX effects 1 Sales (€ mn) EBITDA margin Adj. EBIT margin › EBITDA decreased €806.8 mn to €582.4 mn (-58.1%) 9,305 9,707 9,596 › Adj. EBIT1 decreased €429.8 mn to €433.4 mn (adj. EBIT1 marg
Slide 43: Rubber Group Financials – Tires
Back-up Rubber Group Financials – Tires › Sales decreased 0.2% before Tires FY 2019 consolidation and FX effects Sales (€ mn) EBITDA margin Adj. EBIT 1 margin › EBITDA increased €2.5 mn to 11,728 €2,497.7 mn (+0.1%) 11,326 11,352 › Adj. EBIT1 decreased €194.3 mn to €1,708.3 mn (adj. EBIT1 margin 14.
Slide 44: Rubber Group Financials – ContiTech
Back-up Rubber Group Financials – ContiTech › Sales decreased 3.4% before ContiTech FY 2019 consolidation and FX effects 1 Sales (€ mn) EBITDA margin Adj. EBIT margin › EBITDA decreased €30.9 mn to €670.5 mn (-4.4%) › Adj. EBIT1 decreased €19.9 mn to €466.9 mn (adj. EBIT1 margin 7.5%) 6,246 6,345 6,
Slide 45: Fact Sheets 2017 – 2019
Fact Sheets 2017 – 2019 Preliminary FY 2019 Results - March 5, 2020 © Investor Relations Continental AG 45
Slide 46: Sales by Quarter
Fact Sheets Sales by Quarter 2017 2018 2019 Sales (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 2,497.4 2,437.8 2,307.8 2,524.8 9,767.8 2,511.2 2,455.2 2,247.6 2,374.0 9,588.0 2,359.0 2,384.0 2,289.8 2,348.8 9,381.6 Powertrain 2,003.1 1,947.2 1,810.5 1,900.1 7,660.9 1,94
Slide 47: EBITDA by Quarter
Fact Sheets EBITDA by Quarter 2017 2018 2019 EBITDA (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 336.9 326.9 300.3 337.5 1,301.6 356.8 324.6 219.7 312.2 1,213.3 270.0 292.7 260.4 322.2 1,145.3 Powertrain 213.9 214.4 187.4 239.1 854.8 207.3 219.2 30.7 117.4 574.6 186.0 1
Slide 48: EBIT by Quarter
Fact Sheets EBIT by Quarter 2017 2018 2019 EBIT (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 238.9 227.4 200.0 231.4 897.7 252.9 218.2 110.6 200.8 782.5 147.2 164.4 -590.9 159.0 -120.3 Powertrain 117.1 114.1 83.1 125.6 439.9 99.4 110.7 -87.1 -3.2 119.8 60.9 56.3 -367.8
Slide 49: Adjusted EBIT by Quarter
Fact Sheets Adjusted EBIT1 by Quarter 2018 2019 Adj. EBIT¹ (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 252.9 218.2 112.1 202.1 785.3 148.8 167.6 148.5 211.0 675.9 Powertrain 112.2 118.9 -64.2 53.2 220.1 78.9 72.5 -126.0 31.6 57.0 Interior 191.9 216.3 206.1 248.9 863.2 129.5 128.3 79.1
Slide 50: Consolidated Statement of Income
Fact Sheets Consolidated Statement of Income 2019 2018 2017 2019 2018 2017 (€ mn) Q4 Q4 Q4 Sales 44,478.4 44,404.4 44,009.5 11,064.3 11,230.1 11,283.9 Cost of sales -33,893.4 -33,299.5 -32,635.0 -8,565.6 -8,472.2 -8,348.4 Gross margin on sales 10,585.0 11,104.9 11,374.5 2,498.7 2,757.9 2,935.5 Resea
Slide 51: Consolidated Statement of Financial Position – Assets
Fact Sheets Consolidated Statement of Financial Position – Assets1 (€ mn) December 31, 2019 December 31, 2018 Goodwill 5,113.5 7,233.4 Other intangible assets 1,691.8 1,566.3 Property, plant and equipment 14,932.7 12,375.5 Investment property 11.7 12.0 Investments in equity-accounted investees 397.7
Slide 52: Consolidated Statement of Financial Position – Total Equity and Liabilities
Fact Sheets Consolidated Statement of Financial Position – Total Equity and Liabilities1 (€ mn) December 31, 2019 December 31, 2018 Subscribed capital 512.0 512.0 Capital reserves 4,155.6 4,155.6 Retained earnings 13,522.1 15,697.2 Other comprehensive income -2,794.4 -2,514.4 Equity attributable to
Slide 53: Consolidated Statement of Cash Flows
Fact Sheets Consolidated Statement of Cash Flows (€ mn) 2019 2018 Net income -1,171.0 2,958.3 Income tax expense 582.4 891.6 Financial result 320.3 177.8 EBIT -268.3 4,027.7 Interest paid1 -157.9 -130.4 Interest received1 75.0 39.1 Income tax paid1 -866.0 -848.1 Dividends received 67.3 45.0 Deprecia
Slide 54: FY 2019 Results Reported and Adjusted – by Division
Fact Sheets FY 2019 Results Reported and Adjusted (€ mn) – by Division Chassis & Safety Interior Powertrain Tires ContiTech Cons. / Corr. Corporation 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Sales 9,588.0 9,381.6 9,707.2 9,595.5 7,741.0 7,802.3 11,352.2 11,728.0 6,344.7
Slide 55: FY 2019 Results Reported and Adjusted – by Group
Fact Sheets FY 2019 Results Reported and Adjusted (€ mn) – by Group Q4 2018/2019 FY 2018/2019 Automotive Rubber Cons. / Corr. Corporation Automotive Rubber Cons. / Corr. Corporation 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Sales 6,652.4 6,517.5 4,591.3 4,562.2
Slide 56: Continental's Credit Rating
Fact Sheets Continental’s Credit Rating S&P, Fitch / Moody’s Standard & Poor’s1 Moody’s2 Fitch3 BBB+ / Baa1 Investment Grade BBB / Baa2 BBB- / Baa3 BB+ / Ba1 Non-Investment BB / Ba2 Grade BB- / Ba3 Before B+ / B1 Siemens VDO B / B2 1 Contracted rating since May 19, 2000 2 Contracted rating retroacti
Slide 57: References – Useful Links
References Useful Links Continental Investor Relations website www.continental-ir.com Annual and interim reports www.continental-corporation.com/en/investors/reports Fact Book / Investor Presentation www.continental-corporation.com/en/investors/reports Investor Relations www.continental-corporation.