Deutsche Bank Roadshow Z i h – August Zurich A t 11, 11 2016
Ticker: CON ADR-Ticker: ADR Ticker: CTTAY Twitter: @Continental_IR http://www.continental-ir.com
Nikolai Setzer Member of the Executive Board Tire Division
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
Back-up: H1 2016 Results Presentation
24
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Automotive Group Digitalization Electrification and Mobility Services Digitalization,
Digitalization
Electric Mobility
Mobility Services
Continental's view/position:
Continental's view/position:
Continental's view/position:
› Market for automated driving1 is forecasted to exceed €25 bn by 2020
› FEV2 sales to account for 2% of global car production by 2020
› Market for mobility services is forecasted to exceed €57 bn by 2020
› 60% of our Automotive Group sales in 2015 are derived from sensors, electronics or software products › Vision s o Zero e o acc accidents de ts ac achievable e ab e
› Demand for FEV2 will be determined byy the cost,, life-time,, range and charging time of the battery › Conti has invested more than €1 bn in electric mobilityy to date
› Conti founded new Intelligent g Transportation Services (ITS) business unit in 2014 › First applications include eHorizon and Road Database
All medium-term mobility scenarios still foresee tires on vehicles 1 2
Goldman Sachs Report, Cars 2025: Vol. 3 (Sept 2015) FEV = Full Electric Vehicle
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Automotive Group Digitalization Elektrobit - Software Flash-Lidar
Software - Continental Domain Control Unit
Driver Awareness Stereo Camera Car2x - MK2xPro Surround View
Short / Long Range Radar
Powertrain Management
Fail Operational Brake
Driver HMI
Antenna Module
Backend Services
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Automotive Group Electrification – Relative Value of Continental’s Continental s Content1
Gasoline-related business
Diesel-related business
HEV-related business
FEV-related business
100%1
160%
160-260%
300%
› Engine management systems for diesel piezo common rail injection (injector, ECUs, pressure pumps)
› Engine management systems (gasoline/diesel)
› High voltage axle drive
› Exhaust aftertreatment
› Turbochargers T b h and › 48V solutions or › Plug-in hybrid solutions
› Engine management systems for solenoid direct injection (injector, ECU, pressure pumps) › Exhaust aftertreatment › Sensors and actuators
› Sensors and actuators
› Turbochargers
› Exhaust aftertreatment › Sensors and actuators
› Power electronics › Battery management systems › IInverters t and d DC/DC converters › Electric water pumps
Well positioned in all key technologies 1
Value of gasoline content per car is indexed at 100%; all other values are relative to the gasoline content
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Automotive Group Mobility Services C ti Continental t l Backend B k d Pl Platform tf (for eHorizon, Road Database,…) Vehicle V hi l to t Backend B k d Communication
Vehicle to Infrastructure Communication
Vehicle to Vehicle Communication
Improved prediction of road events and road conditions
Communication broadens the horizon of the on-board surrounding sensors
Relevant market of more than €57 bn by 2020
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Automotive Group Order Intake Confirms Mid Term Target 30
30 26
25
23.6
23 19
18.4
30
19.5
20.0
20.9
15.9
2010
2011
2012
2013
2014
Automotive Group Sales 1
2015
2019E
Order Intake (LTS) 1
Life-time sales = Sum of expected p future sales of all newly y received orders
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Tires Update on Strategy 2025 2 1 3
Stage 1: 2001 – 2010
Stage 2: 2011 – 2015
Stage 3: 2016 – 2025
C Create t V Value l
Sustain Value
E h Enhance Value V l
› Global footprint and business optimized p › Strong cost focus › Global presence of CVT sustained (SA/APAC) › Turnaround of PLT business in NAFTA region succeeded › Worldwide technology gap to competition closed
› Accelerated global growth (focus BRIC countries) › Leverage cost position › Improved technology position to establish among “Best In Class”
› Balance the global footprint › Benefit from excellent cost position › Achieve podium position in technology worldwide › Improve brand awareness further › Rank among the top 3 globally
Continuous value creation is our driving force! Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Tires Balanced Global Manufacturing Footprint 100%
APAC Local sourcing at lowest landed cost
Americas 75%
50%
EMEA Leverage costs
25%
0% 2010
2025
2015
2025 ttargett
Local sourcing at competitive landed cost Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Tires Technological Leadership HP tires and winter tires ww
SD tires
100%
29
80%
Non-OE OE
39%
47%
2010
2015
60%
40%
71
20%
Top position in tire tests
0%
Constant mix improvement demonstrates Continental’s leading position in consumer perception
2025
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
High OE share proves Continental’s capabilities as partner for leading car brands
Technological leadership testified by multiple wins in summer and winter tire consumer tests
Achieve podium position in technology worldwide Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Tires Further Improvement of Brand Awareness 70% 90%
50%
80% 70% 30%
65%
2010
2015
50% 2010
40%
2015
2025 target
2025 target
75%
50%
2010
2015
2025 target 80% 65%
10%
2010
2015
2025 target
75%
25%
2010
2025
59%
2015
2025 target
38%
+15% increase in awareness supports sales growth 2010
2015
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
2025 target
11
2) Tires Drive Global Growth (mn units) 120
80
EMEA Americas 40
APAC 0 2010
2025
2015
2025 target t t
Growth to outperform global market development
2 1 3
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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3) ContiTech Strong Track Record of Acquiring and Integrating Businesses Parker Hannifin’s automotive air conditioning business and Freudenberg Sealing Technologies GmbH Combined sales: ~€180 mn
Matador Rubber s.r.o., Slovakia Conveyor belts Sales: ~€30 mn
Legg Company Inc., USA and Metso Corp., Finland Conveyor belts Combined sales: ~€60 mn
Phoenix AG, Germany Rubber products Sales: ~€1.0 bn
Tianjin j Xinbinhai Conveyor Belt Co., China and Mining Industrial Resource Supplies Pty Ltd., Australia Combined sales: ~€15 mn
Roulunds A/S, Denmark Transmission belts Sales: ~€45 mn
2,894
2,869
Veyance Technologies Inc., USA Rubber products Sales: ~€1.3 bn
3,064
3,583
3,712
12%
12%
5,368
3,878
3,931
12%
11%
3,095
3,007 2,406
2 063 2,063 11% 7%
2004
12%
7%
6%
2005
12%
11%
2006
2007
2008
2009
ContiTech sales ( € mn)
2010
2011
2012
2013
Reported EBITmargin
All sales of acquisitions shown are pro forma sales in the year of the acquisition 1 Before amortization of intangibles from PPA, consolidation and special effects; reported EBIT margin 7%
2014
1,359 3%
10.5%1
2015
Q1 2016
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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3) ContiTech Top 10 Non-Tire Rubber Companies Top 10 Non-Tire Rubber Companies worldwide – 2015 Sales (bn €) 6 000 6,000 5,000 4,000 , 3,000 2,000
Trelle eborg AB (excl. wheel businesss)
NOK (Seal businesss)
Parke er-Hannifin (Fluid co onnectors an nd enginee ered systemss)
Su umitomo Rikko
Coope er Standard
Gates on Corporatio
on Hutchinso
Fre eudenberg (Seals and vibratio on ntrol tech.) con
ContiTecch
0
Bridgeston ne (Diversifie ed Productss)
1,000
Source: Company filings; revenues for Gates and Parker Hannifin are estimates Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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3) ContiTech A Truly Global Player
1
›
LTM sales Q1 16: €5.46 bn
›
Employees (March 31, 2016): 42,501
›
194 locations in 44 countries
›
35 R&D locations worldwide
›
S l 2015 b Sales by market k t › Europe › NAFTA › Asia › Other Oth countries ti
49% 26% 17% 8%
Fluid Technology1 39%
Conveyor Belt Group 19%
Elastomer Coatings 2%
Share of sales 2015 in %
Compounding Technology 4% Vibration Control 7% Air Spring Systems y 7%
P Power Transmission Group 12% Benecke-Kaliko Group 10%
Since 2016 divided in: Mobile Fluid Systems and Industrial Fluid Systems Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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3) ContiTech Relevant Market Offers Attractive Growth Opportunities Σ~€50 bn Σ~€42 bn 9 8 7 6 5 4 3
9
Compounding Technology
8
Elastomer Coatings
7
Air Spring Systems
6
P Power T Transmission i i G Group
5
Vibration Control
4
Conveyor Belt Group
3
Benecke-Kaliko Benecke Kaliko Group
2
Industrial Fluid Systems
1
Mobile Fluid Systems
2 1
2015
2020
Balanced portfolio of OE Automotive and Non-OE Automotive businesses
Source: Market data and Continental estimates. 1 Since 2016, the Fluid Technology business unit has been organized as the Mobile Fluid Systems and Industrial Fluid Systems business units
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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4) Outlook 2020 More than €50 bn in Sales and >20% ROCE by 2020 >50 Rubber Group
39
26
Automotive Group
14 19%
21%
>20%
2015
2020E
12%
2005
2010 Sales (bn €)
Global PC & LT 1 Production
2005-2010: CAGR 3% 1
Passenger car and light truck
2010-2015: CAGR 4%
ROCE 2015-2020E: CAGR 1-2% Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Thank you!
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Disclaimer ›
This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the Deutsche Bank roadshow in Zurich on August 11, 2016. It has not been independently verified. It does not constitute an offer, invitation or recommendation to purchase or subscribe for any shares or other securities issued by Continental AG or any subsidiary and neither shall any part of it form the basis of, or be relied upon in connection with, any contract or commitment concerning the purchase or sale of such shares or other securities whatsoever.
›
Neither Continental Aktiengesellschaft nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss that may arise from any use of this presentation or its contents or otherwise arising in connection with this presentation.
›
This presentation includes assumptions, estimates, forecasts and other forward-looking statements, including statements about our beliefs and expectations regarding future developments as well as their effect on the results of Continental. These statements are based on plans, estimates and projections as they are currently available to the management of Continental. Therefore, these statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Furthermore, although the management is of the opinion that these statements, and their underlying beliefs and expectations, are realistic as of the date they are made, no guarantee can be given that the expected developments and effects will actually occur. Many factors may cause the actual development to be materially different from the expectations expressed here. Such factors include, for example and without limitation, changes in general economic and business conditions, fluctuations in currency exchange rates or interest rates, the introduction of competing products, the lack off acceptance t f new products for d t or services i and d changes h i business in b i strategy. t t
›
All statements with regard to markets or market position(s) of Continental or any of its competitors are estimates of Continental based on data available to Continental. Such data are neither comprehensive nor independently verified. Consequently, the data used are not adequate for and the statements based on such data are not meant to be an accurate or proper definition of regional and/or product markets or market shares of Continental and any of the participants in any market.
›
Unless otherwise stated, all amounts are shown in millions of euro. Please note that differences may arise as a result of the use of rounded amounts and percentages. Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Contact Equity and Debt Markets Relations Vahrenwalder Str. 9 30165 Hanover Germanyy e-mail:
[email protected] www.continental-ir.com Rolf Woller Head of IR Phone: +49 511 938 1068 e-mail:
[email protected] Ingrid Kampf A i t t to Assistant t the th Head H d off IR Roadshow and Conference Organization Phone: +49 511 938 1163 Fax: +49 511 938 1080 e-mail:
[email protected] g p@
Michael Saemann Analysts, Institutional Investors and Sustainability Investors Phone: +49 511 938 1307 e-mail:
[email protected] Klaus Paesler Analysts, Institutional Investors, ADR and Private Investors Phone: +49 511 938 1316 e-mail:
[email protected] Sabine Reese Sustainability, ASM, CMD Organization, IR Website, C it l M Capital Market k t Di Disclosure l R Requirements i t Phone: +49 511 938 1027 e-mail:
[email protected] Henry y Schniewind Analysts, Institutional Investors Phone: +49 511 938 1062 e-mail:
[email protected] Marvin Kalberlah Social Media Phone: +49 511 938 14034 e-mail:
[email protected] Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Continental Financial Calendar 2016 Preliminary figures for the fiscal year 2015
January 11, 2016
Annual Financial Press Conference
March 3, 2016
Annual Shareholders’ Meeting (incl. key data for Q1 2016)
April 29, 2016
Q1 Fi Financial i lR Reportt
M 4, May 4 2016
Half Year Financial Report
August 3, 2016
Nine Month Financial Report
November 10, 2016
2017 Preliminary figures for the fiscal year 2016
January 2017
Annual Financial Press Conference
March 2017
Annual Shareholders’ Meeting (incl. key data for Q1 2017)
April 28, 2017
Q1 Financial Report
May 2017
Half Year Financial Report
August 2017
Nine Month Financial Report
November 2017 Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Continental Share Data / ADR Data Share Data Type of share
No-par value share
Bloomberg Ticker
CON
Reuters Ticker
CONG
y Identification Number (WKN) ( ) German Security
543 900
ISIN Number
DE0005439004
Shares outstanding as at June 30, 2016
200,005,983
ADR Data Ratio (ordinary share: ADR)
1:5
Bloomberg Ticker
CTTAY
Reuters Ticker
CTTAY.PK
ISIN Number
US2107712000
ADR Level
Level 1
Exchange
OTC
Sponsor
Deutsche Bank Trust Company Americas Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
22
Continental Bond Data Issuer
Conti-Gummi Finance B.V., Netherlands1
Continental AG
Continental AG
Continental Rubber of America, Corp.1
Issue
Senior Notes
Senior Notes
Senior Notes
Senior Notes
P i i l amountt Principal
€750 mn
€750 mn
€750 mn
€500 mn
Offering price
99.595%
98.950%
99.228%
99.739%
Rating at issuance date
Ba1 (Moody’s4) BB (S&P) BBB (Fitch2)
Ba2 (Moody’s4) BB (S&P) BB (Fitch2)
Ba1 (Moody’s4) BB (S&P) BBB (Fitch2)
BBB (S&P) BBB (Fitch)
Current corporation and bond ratings3
BBB (Fitch), BBB+ (S&P), Baa1 (Moody’s4)
Coupon
2.5% p.a.
3.0% p.a.
3.125% p.a.
0.5% p.a.
Issue date
September 19, 2013
July 16, 2013
September 9, 2013
November 19, 2015
Maturity
March 20, 2017
July 16, 2018
September 9, 2020
February 19, 2019
Interest payment
Annual March 20
Semi annual January 16/July 16
Annual September 9
Annual February 19, commencing on February 20, 2017
WKN
A1VC6B
A1X24V
A1X3B7
A1Z7C3
ISIN
XS0972719412
XS0953199634
XS0969344083
DE000A1Z7C39
Denomination
€1,000 with min. tradable amount €1,000
€1,000 with min. tradable amount €1,000
€1,000 with min. tradable amount €1,000
€1,000 with min. tradable amount €1,000
1
Guaranteed by Continental AG rating at date of issuance 3 Fitch since July 15, 2013; S&P since May 11, 2016; Moodyʼs since June 30, 2015 4 Non-contracted rating g since February y 1,, 2014 2 Non-contracted
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Back up Back-up H1 2016 Results
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Most Important KPIs for H1 2016 › Sales up by 2% to €20 bn; organic sales growth at 4%; FX negative at €564 mn › Adj. EBIT1 up by 7% to €2.4 bn; adj. EBIT1 margin at 12.1%
(PPA -€69 mn and special effects -€23 mn) › NIAT2 up by 13% to €1.6 bn › Free cash flow amounted to €959 mn including €82 mn cash outflow for acquisitions;
free cash flow before acquisitions amounted to €1,041 mn › Gearing ratio down to 26%; equity ratio at 39% › Value creation: trailing ROCE3 up by 90 bps to 21.2% YOY
Other topics: › Renesas situation impacted organic sales growth in Automotive negatively by about 1%;
revenues will gradually recover in H2 2016 › Order intake in the Automotive Group up to more than €18 bn › S&P rating g upgrade pg to BBB+ outlook stable on May y 11,, 2016 1
Before amortization of intangibles from PPA, consolidation and special effects Attributable to the shareholders of the parent 3 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by average operating assets for the LTM 2
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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Rub bber Grou up
Automotive Grou up
1) Corporation Highlights Divisional Highlights in H1 2016 › Chassis & Safety: Adj. EBIT1 margin at 9.9% (Q2 16: 10.0%); organic sales up by 6% (Q2 16: 8%); ADAS unit sales up by 45% in H1 2016; solid order intake in VED and ADAS › Powertrain: Adj. EBIT1 margin at 5.2% (Q2 16: 6.4%); organic sales up by 2% (Q2 16: 4%); adj. EBIT1 margin before HEV at 8% in Q2 16 › Interior: Adj. EBIT1 margin at 8.8% (Q2 16: 9.1%); organic sales increased by 3% (Q2 16: 4%); muted organic i sales l growth th and d margin i decline d li explained l i d by b severall ramp ups and d th the Renesas R situation it ti in i JJapan › Automotive Group: Organic sales increased by 4% (Q2 16: 5%), worldwide car production up by 2% (Q2 16: 2%); adj. EBIT1 margin down by 70 bps to 8.1% (Q2 16: 8.6%); R&D expense up by €158 mn (14%) › Order intake in the Automotive Group increased to more than €18 bn › Tires: Adj. EBIT1 margin increased by 180 bps to 22.8% benefitting from lower raw material costs totaling €100 mn in H1 2016, solid price mix (-2%); volumes were up by 8% in H1 2016; FX impacted tire sales negatively by 4% in H1 2016 › Tire markets: PC & LT tire replacement demand in Europe was up by 2%; NAFTA was up by 2% › ContiTech: Adj. EBIT1 margin increased by 300 bps to 10.8% in H1 2016; organic sales up by 2% in H1 2016 › Rubber Group: Organic sales up by 5% (Q2 16: 4%) and adj. EBIT1 margin up to 18.8% (Q2 16: 19.8%)
1
Before amortization of intangibles from PPA, consolidation and special effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Selected Press Clippings Released in H1 2016 Multi Function Mono
Turbochargers: RAAX™ technology to debut in Audi A3
Camera with Lidar Continental wins Toyota’s T&D award for ADAS technology, already installed in 10 Toyota models
RAAX™ technology results in up to 3 percent greater efficiency in the engine relevant operating range, leading to reduced emissions. In addition the turbo lag is minimized which results in a significant improvement in response.
A recognition of Continental’s development contribution towards Toyota’s active safety package “Toyota Safety Sense C”. It combines innovative safety technologies Pre-Collision System (PCS), Lane Departure Alert (LDA), and Auto High Beams (AHB) to help assist the driver. Go to press release
VW Tiguan runs AEB on Continental radar sensor only
Long Range Radar Senor
Thanks to its wide field of view it not only detects other vehicles, but even pedestrians for the first time. Ranging up to 170 meters and even in adverse weather conditions. conditions Automatic braking is initiated if necessary - this sensor is now standard in the new VW Tiguan. Go to press release
MK C1
Driver HMI: gesture gesture-based based controls Control at your fingertips while your hands remain safely on the steering wheel: A quick swipe with the thumb, a light wave with the hand to accept an incoming call, activate the required driving mode, or start your favorite song. Go to press release
Go to press release
€50mn invest into radial agricultural tire production Continental is back to the agricultural tire sector as a premium manufacturer. manufacturer Intending to bring a complete tire portfolio for agricultural tractors and harvesting machines to the market. The range will include radial and cross-ply tires in 150 sizes. SoP is planned for 2017.
MK C1 Brake debuts in the new Alfa Romeo Giulia The innovative electronic brake system integrates the brake actuation brake booster and control systems (ABS and ESC) actuation, into a compact, weight-saving braking module that weighs up to 4 kg less than a conventional system. It also fulfills increased pressure dynamics requirements for new ADAS functions. Go to press release
RAAX™Turbine Wheel
Go to press release
Continental C ti t l partners t with ith U.S. U S Department D t t Transportation for Smarter Cities Challenge ›
› ›
off
Continental pledges initial investment of at least $1 million towards the development and deployment of Intelligent Intersection Systems Winner will be the country’s first city to fully integrate innovative technologies into their transportation network As part of its commitment, Continental will provide advanced sensing, vehicle-to-vehicle and vehicle-to-infrastructure (V2X) communication technology Go to press release
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Sales and Adjusted EBIT1 by Quarter FY Sales €34,506 mn
FY Sales €39,232 mn
10,030 9,618
9 569 9,569 8,670 8,390 8,528
H1 Sales €20,042 mn Adj. EBIT1 €2,398 mn
10,016 9,851
10,191
8,918 1,303
1,233
1 095 1,095
1,010
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Sales (mn €) 1
1
Adj. EBIT (mn €)
Before amortization of intangibles from PPA, consolidation and special effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Automotive Group and Rubber Group by Quarter Automotive Group 1
1
Sales (mn €)
Adj. EBIT (mn €)
4,045 5
3,852
4,022 2
3,968 8
4,045 5
3,669
3,487
3,518
3,362
3,271
6,158
6,011
6,005
5,,661
547
800
733
667
538
528
Q4/16
Q3/16
Q2/16
Q1/16
Q4/15
Q3/15
Q2/15
Q1/15
Q4/14
Q3/14
Q2/14
Q1/14
Q4/16
Q3/16
Q2/16
Q1/16
Q4/15
Q3/15
456
Q2/15
Q1/15
Q4/14
Q3/14
Q2/14
505
Q1/14
Adj. EBIT (mn €) 5,996
5,912
5,442
5,162 2
5,176 6
5,129 9
Sales (mn €)
1
Rubber Group
Before amortization of intangibles g from PPA,, consolidation and special p effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Growth Profile of the Corporation H1 2016
PC & LT prod. growth EU/NAFTA
4%
PC & LT prod. growth Europe
1.6%
According to IMF (WEO Update July 2016)
Commercial Vehicle Tires volume growth
8%
3%
Replacement tire volume growth NAFTA
3%
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
Ma arket
Replacement tire volume growth Europe
Conti
2%
Ma arket
Replacement tire volume growth NAFTA
2%
Conti
Replacement tire volume growth Europe
8%
4%
GDP growth Eurozone 2016 1 1
Passenger & Light Truck Tires volume growth
2%
Market
2%
ContiTech organic sales growth
Conti
4%
Market
PC & LT prod. growth ww
Con nti
Automotive Group organic sales growth
30
1) Corporation Highlights Sustainable Value Creation
21 6% 21.6%
20.6% 20.8%
16,522
16,536
16,727
17,510
18,198
18,910
19,681
19,767
19,983
20.0% 19.5%
20.9% 21.1% 21.2%
16,625
19.3%
20.3%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2014
2015 1
trailing OA (mn €) 1
Trailing operating assets are calculated as assets for the last twelve months
2
Trailing ROCE is calculated as reported EBIT for the last twelve months divided by trailing operating assets
Q3
Q4
2016 trailing ROCE
2
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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1) Corporation Highlights Maturities for Syndicated Loan and Bonds1 (mn €) As at June 30, 2016 (mn €)
FY 15
H1 16
Gross indebtedness
5,245
5,230
Cash
1,622
1,720
Net indebtedness
3,542
3,446
Available credit lines
3,612
3,545
Total liquidity
5,233
5,266
750
750
750 500 00
2016
2017
2018 Bonds
1 2
2019
354 2020
2021
Syndicated loan 2
All amounts shown are nominal values Any utilization under the Revolving Credit Facility (RCF) has to be shown as short term debt acc. to IFRS although the RCF matures in 2021. It has a total volume of €3,000 mn
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Automotive Group Sales and Adj. Adj EBIT1 by Division Automotive Group Sales (mn €) H1 2016 12,169
4,123 3.4%
Automotive Group Adj. EBIT1 (mn €) H1 2016
- 57
984
356
3.8%
8.8%
3,655 ,
0
8.1%
189
2.2%
439
4,448
5.2%
9.9%
5 7% 5.7%
1
Adj. EBIT margin (%)
Organic sales growth (%) Chassis Powertrain & Safety
Interior
cons.
Automotive Group
Chassis Powertrain & Safety
Interior
cons.
Automotive Group
Reported change in sales
› › › › 1
Chassis & Safety:
4.0%
Powertrain:
0.2%
Interior:
2.2%
Automotive Group:
2.2%
› › › ›
Reported EBITDA: €1,465 mn (12.0% of sales) Reported EBIT: €942 mn (7.7% of sales) R&D: €1,259 mn (10.3% of sales) Capex: €497 mn (4.1% of sales)
Before amortization of intangibles g from PPA,, consolidation and special p effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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2) Automotive Group Q2 2016: Adj. Adj EBIT1 Impacted by High R&D Expenses Automotive Group Sales (mn €) 5,996
5,661
6,005
6,011
6,158
Adj. EBIT1 (mn €) and Adj. EBIT1 Margin 547
528
9.1%
8.6%
+161 Q2/15
Q3/15
Q4/15
-19 Q1/16
Q2/16
Q2/15
Q3/15
Q4/15
Q1/16
Q2/16
›
Sales increased by €161 mn; organic sales growth in Q2 2016 at 5.1% negatively impacted by the Renesas situation in Japan
› ›
Adj EBIT1 decreased by €19 mn mainly because of high R&D costs for new car programs Adj. Adj. EBIT1 margin at 8.6% (PY: 9.1%) 1
Before amortization of intangibles from PPA, consolidation and special effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
34
3) Rubber Group Sales and Adj. Adj EBIT1 by Division Rubber Group Sales (mn €) H1 2016 5,205 6.2%
- 45
Rubber Group Adj. EBIT1 (mn €) H1 2016
7,896
1,180
4.6%
22.8%
1,467 0
18.8%
2,736 286
1 8% 1.8% Organic sales growth (%)
ContiTech
Tires
cons.
10.8% Rubber Group
Reported change in sales
› › › 1
ContiTech:
1.8%
Tires:
2.8%
Rubber Group:
2.4%
ContiTech
› › › ›
Adj. EBIT 1 margin (%) Tires
cons.
Rubber Group
Reported EBITDA: €1,805 mn (22.9% of sales) Reported EBIT: €1,401 mn (17.7% of sales) R&D: €184 mn (2.3% of sales) Capex: €422 mn (5.3% of sales)
Before amortization of intangibles g from PPA,, consolidation and special p effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
35
3) Rubber Group Q2: Strong Volume Growth in Tires; Stabilization of Industry Business Rubber Group Sales (mn €) 4,045
3,968
4,022
3,852
Adj. EBIT1 (mn €) and Adj. EBIT1 Margin 4,045
800
733
19.8%
18.1%
0 Q2/15
Q3/15
Q4/15
+67 Q1/16
Q2/16
Q2/15
Q3/15
Q4/15
Q1/16
Q2/16
›
Sales remained unchanged; strong volume growth in tires and the stabilization of the industry business in ContiTech were not able to offset negative FX effects; mining business remains subdued
›
Tire volumes increased by 8%; FX had a negative effect of ~4% 4% on tire sales in Q2 2016 while price mix stood at -2%
›
Adj. EBIT1 increased by €67 mn supported by ~50 mn positive effect from lower raw material prices 1
Before amortization of intangibles g from PPA,, consolidation and special p effects
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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3) Rubber Group Expected Raw Material Price Development in 2016 › Natural rubber price (TSR 20)
Raw Material Price Development1 2011 - 2016E (U (U.S. S cents/kg)
expected to average U U.S. S $1 $1.40 40 in 2016 (down from prior forecast of U.S. $1.50)
600
› Synthetic S th ti rubber bb price i (b (butadiene t di
500
cost to amount to about €150 mn in 2016 (up €50 mn from prior forecast)
400 300 200 100 0
TSR 20 (U.S. cents/kg)
1
Average (Y) 1 20: 140 TSR Butadiene: 100
121 141 145 155
› Tailwind from lower raw material
Average (Y) TSR 20: 144 Butadiene: 90
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 86 Q2/16 100 0 Q3/16E 105 5 Q4/16E 108 8
feedstock) forecasted to average U.S. $1.00 in 2016 (up from prior forecast of U.S. $ $0.90))
Average (Y) Average (Y) Average (Y) Average (Y) 1 1 TSR 20: 1463 TSR 20: 326 TSR 20: 259 TSR 20: 181 Butadiene: 297 Butadiene: 244 Butadiene: 148 Butadiene: 132
Butadiene (U.S. cents/kg)
Source: Bloomberg g and Continental estimates for 2016
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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4) Indebtedness and Cash Flow Net Indebtedness Bridge (mn €) 458 622 960
82
611
750
928
3,542 27%
1 2
3,446
N Net indebttedness (H1 2 2016)
Other CF
Dep pr. and amorrtization
Change in ayables pa
Cha ange in inve entories
Cha ange in rece eivables
Acqu uisitions2
Capex1
Dividend D 2015
26%
N Net indebttedness (FY 2 2015)
Gearing Ratio
1,427
€468 mn outflow from change in working capital
According to cash flow statement incl. intangible assets Several smaller acquisitions q in the Automotive and Rubber Group p
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
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4) Indebtedness and Cash Flow Cash Flow Overview Cash Flow H1 2015 and H1 2016 (mn €)
1,041
282 2 -941
-1,0 023
--832
-1,43 32 Cash flow from operating activities
959
2016 before acquisitions
882
2016
1,982
1,982
2015 before acquisitions
1,714 4
1,714 4
2015
Cash flow used for investing activities
Free cash flow
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
39
4) Indebtedness and Cash Flow Net Indebtedness and Gearing Ratio Net indebtedness (mn €)
3,44 46
26%
3,08 83
23%
3,54 42
27%
4,29 96
34%
4,23 36
34%
4,09 99
34%
2,82 24
26%
3,92 26
36%
4,27 73
42%
4,24 42
43%
Gearing ratio
Q1
H1
9M
YE
Q1
H1
9M
YE
Q1
H1
2014
2015
9M
YE
2016
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
40
5) Outlook 2016 PC & LT Production by Quarter
9% 4%
4% 0% 1%
3%
2014: 0 17.0
8%
7%
5% 5% 2%
2015: 0 5 17.5
5% 4% 1%
-1%
2014: 22.6
2016E: 0 6 17.5
1% 2%
4% 3% 4%
2016E: 24.6
15% 11% 9%
5%
2015: 23.7
7.170 6.35 50 6.000 5.380 6.840 6
2016E: 0 6 21.1
China (mn units)
4.20 04 4.4 412 4.17 77 4.23 37 4.26 67 4.521 4.350 4.3 363 4.4 440 4..580 4.25 50 4.26 63
2015: 0 5 20.7
5.173 5.269 4.4 492 4.931 5.381 5.406 4.710 4 5.153 5.470 5.800 4.750 4 5.120
2014: 0 19.9
NAFTA (mn units)
5.569 5.589 5.220 6.232 5.971 5.708 4 4.830
Europe (mn units)
11%
6% 6% 7%
6% 5% 2%
1% -2%-2% 2% 2%
-5%
Europe
chg YOY
NAFTA
chg YOY
Source: IHS and own estimates, Europe excluding Kazakhstan and Uzbekistan
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16E E Q2/16E E Q3/16E E Q4/16E E
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16E E Q2/16E E Q3/16E E Q4/16E E
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16E E Q2/16E E Q3/16E E Q4/16E E
-7%
China
chg YOY
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
41
5) Outlook 2016 Market Outlook for Major Regions in 2016 PC and LT1 Production (mn units) 2015E
46 4 47.8 46.4
2016E
Commercial Vehicle2 Prod. (k units) 2015E
2016E 1,607 1,655
20.7 21.1
17.5 17.5 0%
Europe
NAFTA
Source: IHS and own estimates
590 626 3.0
2.6
South America
104 Asia
324 329
2016E
Europe
415 436
88
South America
Asia
CV Repl.4 Tire Market (mn units) 2015E
2016E
85.0 87.0
278 283 23.5 24.2 64
Europe
NAFTA
Source: IHS and own estimates
PC and LT Repl.3 Tire Market (mn units) 2015E
574 505
NAFTA
Source: LMC and own estimates
22.8 23.2
61
South America 1
Asia
Europe
Source: LMC and own estimates
Passenger car and light truck 6t 3 Passenger car & light truck replacement 4 Commercial vehicle replacement (radial and biased) 2
NAFTA
13 2 12.5 13.2 12 5 South America
Asia
Deutsche Bank Roadshow Zurich – August 11, 2016 EDMR – Equity and Debt Markets Relations
42
5) Outlook 2016 Continental Corporation 2015
2016E
Consolidated sales adj. EBIT1
€39.2 bn €4.5 bn
To increase to ~€41 €41 bn at constant FX rates >11%
Automotive Group adj. EBIT1
€23.6 bn €2.1 bn
~€25 bn >8.5%
Rubber Group adj. EBIT1
€15.7 bn €2.5 bn
>€16 bn >17%
Raw material cost impact
Relief of about €250 mn
Special effects
-€116 mn
About -€100 mn
Net interest result Tax rate
-€246 €246 mn 28.2%
