FY 2016 Results Hanover March 2, 2017 Ticker: CON ADR-Ticker: - - PowerPoint PPT Presentation
FY 2016 Results Hanover March 2, 2017 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR Michael Saemann IR Manager Marvin Kalberlah IR Manager http://www.continental-ir.com AGENDA 1 Corporation Highlights 3 2 Automotive
http://www.continental-ir.com Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR
Michael Saemann IR Manager Marvin Kalberlah IR Manager
Corporation Highlights 1 3 Automotive Group 2 12 Rubber Group 3 19 Indebtedness and Cash Flow 4 26 Outlook 2017 5 30 28 Medium Term Outlook 6 33
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 2
28 Medium Term Outlook 6 33 Back-up & Fact Sheets 2014-2016 7 40
› Sales up by 3% to €40.5 bn; organic sales growth at 5%; FX negative at €827 mn › Adj. EBIT1 down by 1% to €4.3 bn; adj. EBIT1 margin at 10.8%
(PPA2 -€144 mn and special effects -€70 mn)
› NIAT3 amounted to €2.8 bn, up by 3% › Free cash flow amounted to €1.8 bn including more than €500 mn cash outflow for acquisitions
(mainly Hoosier Racing Tire and Zonar Systems); free cash flow before acquisitions amounted to €2.3 bn
› Gearing ratio down to 19%; equity ratio improved to 41%
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 3
1 Before amortization of intangibles from PPA, consolidation and special effects 2 Amortization of intangibles from PPA 3 Attributable to the shareholders of the parent 4 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by average operating assets for the LTM 5 Subject to approval of the Annual Shareholders’ Meeting (ASM) on April 28, 2017
› Value creation: trailing ROCE4 back to 20.0% despite the impact from isolated events
amounting to €480 mn
› Other topics: › Order intake: lifetime sales in Automotive increased to more than €35 bn › Hornschuch acquisition closed; it will be consolidated starting March 1, 2017 and contribute about
€300 mn to ContiTech sales in 2017
› Dividend to increase by 13% to €4.255 for FY 2016
Automotive Group
› Chassis & Safety: 6.6% adj. EBIT1 margin (PY: 9.6%); organic sales up by 7.5%; ADAS sales increased to more than €1.2 bn; order intake in ADAS amounted to >€3 bn › Powertrain: 5.5% adj. EBIT1 margin (PY: 5.7%); organic sales up by 5.1%; adj. EBIT1 margin before HEV at 7.5%; more than €1.2 bn in life-time sales acquired in HEV business unit › Interior: 7.8% adj. EBIT1 margin (PY: 10.0%); organic sales increased by 3.3%; organic sales growth held back by supply situation in Japan › Automotive Group: Organic sales increased by 5.3%, exceeding worldwide car production by 2%-points;
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 4
A Rubber Group
› Tires: Adj. EBIT1 margin sustained at high level (21.7% vs. PY 20.1%), benefiting from lower raw material costs, strict cost management and solid price mix (-2%); volumes were up by 6%; FX impacted tire sales negatively by 2%; organic sales up by 4.7% Tire markets: PC & LT tire replacement demand in Europe and North America was up by 2% › ContiTech: Adj. EBIT1 margin increased by 250 bps to 9.7%; organic sales up by 2.5%; ContiTech over achieved its own target for the adjusted EBIT1 margin on strict cost management benefitting from the restructuring initiated in 2016; ROCE improved to 13.5% › Rubber Group: Organic sales up by 3.9% and adj. EBIT1 margin up to 17.8% (PY: 15.8%) › Order intake in the Automotive Group increased to more than €35 bn
1 Before amortization of intangibles from PPA, consolidation and special effects
8,390 8,528 8,670 8,918 9,569 10,030 9,618 10,016 9,851 10,191 9,984 10,524 1,233 1,095 1,303 1,298
FY Sales €34,506 mn FY Sales €40,549 mn
FY Sales €39,232 mn
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
1,010 1,233 1,072 1,054 1,095 645 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 €)
5
1 Before amortization of intangibles from PPA, consolidation and special effects
1
3,271 3,362 3,518 3,487 3,669 4,045 3,968 4,022 3,852 4,045 4,038 4,164 733 667 800 719 Sales (mn €)
5,129 5,176 5,162 5,442 5,912 5,996 5,661 6,005 6,011 6,158 5,958 6,370 Sales (mn €)
1 1
Automotive Group Rubber Group
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
538 733 644 570 667 643 719
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16
505 547 453 534 456 528 40 608
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16
6
1 Before amortization of intangibles from PPA, consolidation and special effects
1.6% 3% 2% GDP growth advanced economies 2016 PC & LT prod. growth Europe ContiTech
growth 2% 3% 5% PC & LT prod. growth Europe and North America PC & LT prod. growth ww Automotive Group organic sales growth
Conti Market
1
Conti Market
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
2% 3% 4% Replacement tire volume growth North America Replacement tire volume growth Europe Commercial Vehicle Tires volume growth 2% 2% 6% Replacement tire volume growth North America Replacement tire volume growth Europe Passenger & Light Truck Tires volume growth
7
1 According to IMF definition (WEO Update January 2017)
Conti Market Conti Market
4,096 144 32 42 43 15 4,341
› C&S
€9.1 mn
› Powertrain
€0.4 mn
› Interior
€9.3 mn
› C&S
€0.3 mn
€1.3 mn
› Powertrain
€7.6 mn
› Interior
€0.0 mn
› Tires › C&S
€0.2 mn
› Powertrain
€2.1 mn
› Interior
€26.4 mn
› Tires
−
› C&S
−
› Powertrain
› Interior
€0.1 mn
› Tires
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Reported EBIT 2016 PPA Consolidation effects Asset impairment (net) Restructuring costs Other special effects
2016
8
1 Before amortization of intangibles from PPA, consolidation and special effects 2 Amortization of intangibles from PPA 3 Including asset impairment and necessary reversal of impairment losses amounting to €16.4 mn
2 1 3
› Tires
€9.6 mn
› ContiTech
€3.1 mn €0.3 mn
› Powertrain
€11.5 mn
› Interior
€38.4 mn
› Tires
€10.7 mn
› ContiTech
€82.7 mn
› Tires
€0.2 mn
› ContiTech
€33.1 mn −
› ContiTech
€14.5 mn
› Tires
› ContiTech
20.6% 20.8% 19.3% 20.0% 19.5% 20.3% 21.6% 20.9% 21.1% 21.2% 18.9% 20.0%
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
16,625 16,522 16,536 16,727 17,510 18,198 18,910 19,681 19,767 19,983 20,106 20,453 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016
Trailing OA (mn €) Trailing ROCE
9
1 Trailing operating assets are calculated as assets for the last twelve months (LTM) 2 Trailing ROCE is calculated as reported EBIT for the last twelve months (LTM) divided by trailing operating assets
1 2
As at December 31, 2016
(mn €) FY 15 FY 16 Gross indebtedness 5,245 4,952 Cash 1,622 2,107 Net indebtedness 3,542 2,798 Available credit lines 3,612 3,888 Total liquidity 5,233 5,995 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
750 750 500 1,350 2017 2018 2019 2020 2021
10
1 All amounts shown are nominal values
Bonds
9.53 9.62 11.88 13.64 14.01 23.6% 26.0% 27.4% 27.5% 30.3%
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
2.25 2.50 3.25 3.75 4.25 2012 2013 2014 2015 2016 DPS (€) EPS reported (€) Payout Ratio
11
1 Dividend subject to approval of the Annual Shareholders’ Meeting (ASM) on April 28, 2017 2 Dividend paid for the respective fiscal year, payout in the subsequent year
1
2
592 398 642 1,632
5.5% 7.8% 6.7%
8,978 7,320 8,325 125 24,496
5.1% 3.3% 5.3% 7.5%
Automotive Group Sales (mn €) FY 2016
Automotive Group Adj. EBIT1 (mn €) FY 2016
EDMR – Equity and Debt Markets Relations
592
Chassis & Safety Powertrain Interior cons. Automotive Group 6.6%
Chassis & Safety Powertrain Interior cons. Automotive Group 7.5% Organic sales growth (%)
Reported change in sales
› Chassis & Safety:
6.2%
› Powertrain:
3.6%
› Interior:
2.1%
› Automotive Group:
3.9%
12 1
1 Before amortization of intangibles from PPA, consolidation and special effects
› Reported EBITDA: €2,615 mn (10.7% of sales) › Reported EBIT: €1,527 mn (6.2% of sales) › R&D: €2,431 mn (9.9% of sales) › Capex: €1,497 mn (6.1% of sales)
6,005 6,011 6,158 5,958 6,370 534 608
8.9% 9.6%
Automotive Group Sales (mn €)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16
› Sales increased by €365 mn; organic sales growth in Q4 2016 at 7.0% › Adj. EBIT1 increased by €74 mn; operating leverage2 at 22% › Adj. EBIT1 margin at 9.6% (PY: 8.9%)
13
+365 +74
1 Before amortization of intangibles from PPA, consolidation and special effects 2 Operating leverage is defined as delta adj. EBIT1 divided by delta adjusted sales
% 5% 6% 7% 3% 3% 4% 8% 10% 8% 9% 8%
Organic Sales Growth vs. PC & LT1 Production Growth Organic Sales Growth by Division
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
3% 2% 3 Q1/16 Q2/16 Q3/16 Q4/16
Automotive Group PC & LT prod. growth ww
4% 1% 3% 8 4% 4% 2% 4% Q1/14 Q2/14 Q3/14
14
Chassis & Safety Powertrain Interior
1 Passenger car and light truck 2 Microcontrollers
Q1/16 Q2/16 Q3/16 Q4/16 Q1/16 Q2/16 Q3/16 Q4/16 Q1/16 Q2/16 Q3/16 Q4/16
Interior Order Intake (bn €)
Chassis & Safety Order Intake (bn €) Powertrain Order Intake (bn €)
› ADAS book-to-bill ratio at 2.5x exceeding €3 bn › VED book-to-bill at 1.5x mainly on new MC100 and MC 1 › More than 40% of the order intake was acquired again outside of Europe and North America › Business unit HEV acquired >€1.2 bn in lifetime sales › Sensors & Actuators book-to-bill ratio at 1.5x › All business units recorded an
› Overall solid order backlog with book-to-bill running at 1.6x in business unit IC mainly on connectivity business › First order acquired in ITS › 28% of order intake was acquired in Asia › Aftermarket market business
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
9.2 9.6 10.0
1.3 1.2 1.2
2014 2015 2016
LTS (bn €) Book-to-bill
11.2 9.7 11.5
1.7 1.4 1.6
2014 2015 2016
LTS (bn €) Book-to-bill
9.9 11.1 13.5
1.3 1.3 1.5
2014 2015 2016
LTS (bn €) Book-to-bill
15
1 Lifetime sales
› Aftermarket market business impacts OI negatively
Order Intake in 2016 by Region
Europe 38% North America 23% South America 1%
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 16
China 25% Other Asia 13%
275 1,497 6.4% 6.9% 6.8% 30 40
Capex (mn €) and Capex Ratio Order intake (bn €) and R&D Ratio
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
740 969 1,036 1,016 1,126 1,275 1, 4.6% 5.3% 5.3% 5.1% 5.4% 5.4% 6.1% 2010 2011 2012 2013 2014 2015 2016
Capex Capex ratio
6.4% 6.0% 5.8% 6.2% 6.1% 6.9% 6.8% 10 20 2010 2011 2012 2013 2014 2015 2016 Order intake (LTS) R&D as percentage of OI
1 LTS = Lifetime sales
1 17
175% 225%
Automotive Group: Rise in R&D not Harmful to Gross Earnings
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
75% 125% 2010 2011 2012 2013 2014 2015 2016 R&D Expenses Gross Earnings 100%
18
5,463 10,717 82 16,098
2.5% 4.7% 3.9%
522 2,306 2,828
21.7% 17.8%
Rubber Group Sales (mn €) FY 2016 Rubber Group Adj. EBIT1 (mn €) FY 2016
EDMR – Equity and Debt Markets Relations
ContiT ech Tires cons. Rubber Group 2.5% Organic sales growth (%)
522
ContiT ech Tires cons. Rubber Group 9.7%
Reported change in sales
› ContiTech:
1.8%
› Tires:
3.0%
› Rubber Group:
2.5%
19
1 Before amortization of intangibles from PPA, consolidation and special effects
1
› Reported EBITDA: €3,560 mn (22.1% of sales) › Reported EBIT: €2,689 mn (16.7% of sales) › R&D: €381 mn (2.4% of sales) › Capex: €1,094 mn (6.8% of sales)
4,022 3,852 4,045 4,038 4,164 570 719
14.2% 17.4%
Rubber Group Sales (mn €)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16
› Sales increased by €142 mn › Adj. EBIT1 increased by €149 mn, adj. EBIT1 margin at 17.4% (PY: 14.2%) › Tire volumes increased by 6% during Q4; P/M was slightly positive and raw material cost provided a
relief of €10 mn in Q4 2016
20
+142 +149
1 Before amortization of intangibles from PPA, consolidation and special effects
0% 7% 8% 3% 3% 1% 2% 4% 9% 7% 1% 6%
PLT Tire Market ww vs. Continental Truck Tire Market ww vs. Continental
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
0%
Q1/16 Q2/16 Q3/16 Q4/16 Truck tire market ww Truck tire volumes Continental Q1/16 Q2/16 Q3/16 Q4/16
PLT tire market ww PLT tire volumes Continental
21
9% 7% 1% 6% 0% 0% 4% 7% Unit sales growth (ww) Sales growth PLT tires
Volume and Price/Mix 2016
Growth Matrix PLT Tires CAGR 2010-2016
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Q1/16 Q2/16 Q3/16 Q4/16 Continental tire volume (ww) Continental P/M 20% 13% 1% Unit sales growth ≥ 18" Unit sales growth ≥ 17" Unit sales growth winter tires
22
1 Including winter tires
280 235 235 230 300 400
› Natural rubber price (TSR 20)
expected to average U.S. $2.25 in 2017 (PY: U.S. $1.38 and up from prior forecast of U.S. $2.10)
› Synthetic rubber price (butadiene
feedstock) forecasted to average U.S. $2.45 in 2017 (PY: U.S. $1.13 and up from prior forecast of U.S. $1.95)
› U.S. $50 mn gross burden expected
Raw Material Price Development1 2012 - 2017E (U.S. cents/kg)
1 1 1 1
Average (Y) TSR 20: 316 Butadiene: 244 Average (Y) TSR 20: 251 Butadiene: 148 Average (Y) TSR 20: 172 Butadiene: 132 Average (Y) TSR 20: 137 Butadiene: 90 Average (Y) TSR 20: 138 Butadiene: 113 Average (Y) TSR 20: 225 Butadiene: 245
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
225 225 225 225 100 200
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 Q2/16 Q3/16 Q4/16 Q1/17E Q2/17E Q3/17E Q4/17E
TSR 20 (U.S. cents/kg) Butadiene (U.S. cents/kg)
› U.S. $50 mn gross burden expected
for every U.S. $10 rise in oil price (average was U.S. $44 in 2016)
› Headwind from rising raw material
cost to amount to about €500 mn (up from prior forecast of €400 mn) in 2017
› Cost burden will temporarily weigh
business
23
1 Source: Bloomberg and Continental estimates for 2017
mn € Veyance 2015 ContiTech "old" 2015 ContiTech 2015 ContiTech 2016 Sales 1,145 4,223 5,368 5,463 EBIT reported
404 171 399 PPA 97 7 104 83 Special effects 89 25 114 37
1 2
Overview from March 3, 2016
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Special effects 89 25 114 37 EBIT before PPA and special effects
436 388 522 Integration cost 72 72 Reference point for 2016 24 436 460 522 in % of sales 2.1% 10.3% 8.6% 9.7%
24
1 Including some minor consolidation effects 2 Amortization of intangibles from PPA 3 EBIT before amortization of intangibles from PPA, consolidation and special effects
Reference point for 2016
3 3
1,000 1,500 2,000 2,500 3,000 3,500 4,000 50 100 150 Jan- 07 Jan- 08 Jan- 09 Jan- 10 Jan- 11 Jan- 12 Jan- 13 Jan- 14 Jan- 15 Jan- 16 Jan- 17
Oil WTI (US $/b) Crude Oil Rotary Rig Count Data (ww, rS)
Oil Price and Rig Count Data
› Challenges › Oil- and mining-related exposure
amounts to about 15% of ContiTech sales
› No recovery in mining-related
businesses before 2018 expected
› Restructuring undertaken allowed us to
close FY 2016 ahead of our own targets
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Oil WTI (US $/b) Crude Oil Rotary Rig Count Data (ww, rS) 31 30 30 20 40 60 80 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E Mining Capex 2007-2015 Mining Capex FC 16/17 (Jan 2016) Mining Capex FC 16/17 (Jul 2016) Mining Capex FC 16/17/18 (Dec 2016)
1 Source: Company filings and consensus data for BHP, Rio, Vale, Grupo Mexico,
FCX, ABX, GG, NEM, NCM, TCK/B, ANTO, NUE, AA, KGC, AEM, EGO
Mining Capex (mn US$)1
› Opportunities › Hornschuch to complement ContiTech’s
industrial portfolio and strengthens Benecke-Kalikos market position
› Oil-related business with chance to
further recover in 2017
› Cost structure in mining related
business aligned to benefit from any recovery ahead
25
3,542 750 2,708 519 632 326 748 1,962 2,798
€210 mn outflow from change in working capital
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
2,970 2,798 Net indebtedness (FY 2015) Dividend 2015 Capex Acquisitions Change in receivables Change in inventories Change in payables
amortization Other CF Net indebtedness (FY 2016)
26
1 According to cash flow statement incl. intangible assets 2 Purchase price including acquired net indebtedness
change in working capital
1 Gearing Ratio 2
27% 19%
65% 219% 118% 90%
Net indebtedness (mn €) Gearing ratio applying IAS 19 (rev. 2011) Gearing ratio
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 27
8,896 7,317 6,772 5,320 4,289 2,824 3,542 2,798 65% 46% 26% 27% 19% 58% YE YE YE YE YE YE YE YE 2009 2010 2011 2012 2013 2014 2015 2016
1,640 1,653 1,818 2,015 1,444 1,771 1,257 516 98% 39% 87% 95% 85% 99% 82%
1
∑ 2,701 ∑ 2,287
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
629 567 491 1,444 2008 2009 2010 2011 2012 2013 2014 2015 2016
Free cash flow (mn €) Cash outflow acquisitions (mn €) Cash conversion
28
Cumulative €13.8 bn
1 Free cash flow before acquisitions divided by net income attributable to the shareholders of the parent; IAS 19 (rev.2011) applied since 2012
4,916 1,444 2,701 4,938 1,771 2,287
2015 2015 before acquisitions 2016 2016 before acquisitions
+€436 mn
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Cash flow from
Cash flow used for investing activities Free cash flow
29
mn +€22 mn
5.971 5.708 830 7.170 6.392 6.050 6.288 7.869 6.450 6.500 6.580 8.140
30%
01 5.382 5.408 75 5.172 5.501 5.876 20 5.260 5.706 5.665 850 5.460
2015: 20.7 2016E: 21.4 2017E: 21.7
Europe (mn units)
2015: 17.5 2016E: 17.8 2017E: 17.4
North America (mn units)
2015: 23.7 2016E: 26.6 2017E: 27.7
China (mn units)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
4.830
7% 2%
15% 7% 6% 10% 1% 7% 5% 3%
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16E Q1/17E Q2/17E Q3/17E Q4/17E
China chg YOY
4.267 4.521 4.350 4.363 4.456 4.601 4.409 4.360 4.520 4.400 4.210 4.250
1% 2% 4% 3% 4% 2% 1% 0% 1%
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16E Q1/17E Q2/17E Q3/17E Q4/17E
North America chg YOY
5. 5. 4.775 5.1 5 4.720 5.2 4.850 5
4% 3% 6% 5% 2% 9%
2% 4%
3% 4%
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16E Q1/17E Q2/17E Q3/17E Q4/17E
Europe chg YOY
30
1Source: IHS and own estimates, Europe excluding Kazakhstan and Uzbekistan
21.4 17.8 2.8 49.5 21.7 17.4 2.8 50.9 Europe North America South America Asia 2016E 2017E 625 505 80 1,789 613 480 81 1,861 Europe North America South America Asia 2016E 2017E
Commercial Vehicle2 Prod. (k units)
IHS and own estimates IHS and own estimates
PC & LT1 Production (mn units)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
America America America America 332 283 63 431 337 287 65 449 Europe North America South America Asia 2016E 2017E 23.7 23.2 13.6 86.9 24.1 23.4 13.8 90.0 Europe North America South America Asia 2016E 2017E
31
CV Repl.4 Tire Market (mn units)
IHS and own estimates LMC and own estimates IHS and own estimates LMC and own estimates
PC & LT Repl.3 Tire Market (mn units)
1 Passenger car and light truck <6t 2 Heavy vehicles >6t 3 Passenger car & light truck replacement 4 Commercial vehicle replacement (radial and biased)
Consolidated sales
€40.5 bn €4.3 bn Automotive Group
€24.5 bn €1.6 bn Rubber Group
€16.1 bn €2.8 bn Raw material cost impact Relief of about €150 mn
2016
To increase to >€43 bn at constant FX rates >10.5% adj. EBIT1 margin To increase to ~€26 bn at constant FX rates ~8.5% adj. EBIT1 margin To increase to >€17 bn at constant FX rates >15% adj. EBIT1 margin Raw materials to burden Rubber Group with about €500 mn on latest assumptions
2017E
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
1 Before amortization of intangibles from PPA, consolidation (2016 in comparison to 2015) and special effects
impact €150 mn Special effects
Net interest result Tax rate
28% Capex PPA €2.6 bn €144 mn Free cash flow before acquisitions €2.3 bn €500 mn on latest assumptions About -€100 mn ~-€200 mn at constant FX rates <30% Capex at around 6.5% of sales PPA amortization: ~€200 mn ~€2 bn
32
14 26 39 >50
Rubber Group Automotive Group
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
14
19% 12% 21% >20% 2005 2010 2015 2020E Sales (bn €) ROCE
33
1Passenger car and light truck
2005-2010: CAGR 3% 2010-2015: CAGR 4% 2015-2020E: CAGR 1-2% Global PC & LT 1 Production
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 34
› This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the Annual Press
Conference and the Analyst and Investor Call on March 2, 2017, and the subsequent road shows in Europe, North America and Asia. 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
› 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
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,
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 35
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 or 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
› 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
Vahrenwalder Str. 9 30165 Hanover Germany E-mail: ir@conti.de Fax: +49 511 938 1080 www.continental-ir.com Rolf Woller Head of IR Phone: +49 511 938 1068 E-mail: rolf.woller@conti.de Jana Cross Michael Saemann Analysts, Institutional Investors and Sustainability Investors Phone: +49 511 938 1307 E-mail: michael.saemann@conti.de Klaus Paesler Analysts, Institutional Investors, ADR and Private Investors Phone: +49 511 938 1316 E-mail: klaus.paesler@conti.de Sabine Reese Sustainability, ASM, CMD Organization, IR Website, Capital Market Disclosure Requirements
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 36
Jana Cross Assistant to the Head of IR Roadshow and Conference Organization Phone: +49 511 938 1163 E-mail: jana.cross@conti.de Capital Market Disclosure Requirements Phone: +49 511 938 1027 E-mail: sabine.reese@conti.de Marvin Kalberlah Social Media Phone: +49 511 938 14034 E-mail: marvin.kalberlah@conti.de
2017
Preliminary figures for fiscal 2016 January 9, 2017 Annual Financial Press Conference March 2, 2017 Annual Shareholders’ Meeting (incl. key data for Q1 2017) April 28, 2017 Q1 Financial Report May 9, 2017 Half-Year Financial Report August 3, 2017 Nine-Month Financial Report November 9, 2017
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 37
2018
Preliminary figures for fiscal 2017 January 2018 Annual Financial Press Conference March 2018 Annual Shareholders’ Meeting (incl. key data for Q1 2018) April 27, 2018 Q1 Financial Report May 2018 Half-Year Financial Report August 2018 Nine-Month Financial Report November 2018
Share Data
Type of share No-par value share Bloomberg Ticker CON Reuters Ticker CONG German Security Identification Number (WKN) 543 900 ISIN DE0005439004 Shares outstanding as at December 31, 2016 200,005,983
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 38
ADR Data
Ratio (ordinary share: ADR) 1:5 Bloomberg Ticker CTTAY Reuters Ticker CTTAY.PK ISIN US2107712000 ADR Level Level 1 Exchange OTC Sponsor Deutsche Bank Trust Company Americas
Issuer Conti-Gummi Finance B.V., Netherlands1 Continental AG Continental Rubber of America, Corp.1 Continental AG Continental AG Issue Senior Notes Senior Notes Senior Notes Senior Notes Senior Notes Principal amount €750 mn €750 mn €500 mn €600 mn €750 mn Offering price 99.595% 98.950% 99.739% 99.410% 99.228% Rating at issuance date Ba1 (Moody’s4) BB (S&P) BBB (Fitch2) Ba2 (Moody’s4) BB (S&P) BB (Fitch2) BBB (S&P) BBB (Fitch) BBB+ (S&P) BBB+ (Fitch) Ba1 (Moody’s4) BB (S&P) BBB (Fitch2)
Current corporation and bond ratings3 BBB+ (Fitch), BBB+ (S&P), Baa1 (Moody’s4)
Coupon 2.5% p.a. 3.0% p.a. 0.5% p.a. 0.0% p.a 3.125% p.a. Issue date September 19, 2013 July 16, 2013 November 19, 2015 December 5, 2016 September 9, 2013 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 39
1 Guaranteed by Continental AG 2 Non-contracted rating at date of issuance 3 Fitch since October 24, 2016; S&P since May 11, 2016; Moodyʼs since June 30, 2015 4 Non-contracted rating since February 1, 2014
Issue date September 19, 2013 July 16, 2013 November 19, 2015 December 5, 2016 September 9, 2013 Maturity March 20, 2017 July 16, 2018 February 19, 2019 February 5, 2020 September 9, 2020 Interest payment Annual March 20 Semi annual January 16/July 16 Annual February 19, commencing
Not applicable Annual September 9 WKN A1VC6B A1X24V A1Z7C3 A2DARM A1X3B7 ISIN XS0972719412 XS0953199634 DE000A1Z7C39 XS1529561182 XS0969344083 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 €1,000 with min. tradable amount €1,000
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
40
› Sales › EBITDA › EBIT › NIAT3 › EPS3 › Capex
Increase of 3.4% to €40,549.5 mn (PY: €39,232.0 mn); organic sales up 4.7% Increase of 0.9% to €6,057.4 mn (PY: €6,001.4 mn) Decrease of 0.5% to €4,095.8 mn (PY: €4,115.6 mn);
PPA2 effect -€143.6 mn; total special effects -€70.3 mn Increase of 2.8% to €2,802.5 mn (PY: €2,727.4 mn) EPS of €14.01 (PY: €13.64) EPS before PPA2 €14.53 (PY: €14.13 before PPA2) Capex increased to €2,593.0 mn (PY: €2,178.8 mn); capex ratio 6.4% of sales;
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 41
› Capex › R&D › Cash flow › Net debt › PaSO
Capex increased to €2,593.0 mn (PY: €2,178.8 mn); capex ratio 6.4% of sales; capex to depreciation coverage 1.3x (1.4x ex PPA2) Expenses for research and development increased by 14.8% to €2,811.5 mn (PY: €2,449.6 mn); R&D ratio 6.9% of sales (PY: 6.2%) Operating cash flow up by €22.5 mn to €4,938.1 mn; free cash flow €1,771.3 mn Net indebtedness down by €744.1 mn to €2,797.8 mn vs. FY 2015; Liquidity and undrawn credit lines amounted to €5,995.4 mn Pension and similar obligation amounted to €4,149.9 mn (PY: 3,523.7)
1 Before amortization of intangibles from PPA, consolidation and special effects 2 Amortization of intangibles from PPA, tax rate of 28% applied for EPS calculation 3 Attributable to the shareholders of the parent
Units (YOY change) Q1/15 H1/15 9M/15 FY 15 Q1/16 H1/16 9M/16 FY 16 Market data for PC and LT production Europe 4% 3% 4% 4% 2% 5% 3% 3% North America 1% 2% 3% 3% 4% 3% 2% 2% EU and NAFTA combined 3% 3% 4% 4% 3% 4% 3% 2% Worldwide 2% 1% 2% 2% 2% 3% 3% 3% Continental Electronic Brake Systems (EBS) 8% 6% 5% 5% 0% 4% 6% 6% Boosters
1% EPB-Systems 59% 53% 47% 48% 38% 58% 51% 48% Advanced driver assistance systems (ADAS) 46% 53% 59% 58% 51% 45% 38% 36% Engine electronic control units (ECUs)
3% 6% 8% Injectors
2% 7% Transmissions 6% 2% 0%
1% 1% Turbochargers 59% 45% 50% 43% 23% 24% 18% 17% FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 42
Note: Following products have been replaced in the statistics in order to better reflect current market trends. The ABS (anti locking brake systems) and ESC (electronic stability control) are included in a so called electronic brake system (EBS). The sequential decline in unit sales in early 2016 is largely attributable to the change over from MK60 to MK100 brake system. Calipers have been replaced by electronic parking brake systems (EPB-Systems) as the former cable puller handbrake is more and more replaced by an EPB. The EPB-Systems integrates the caliper into the electronic parking brake. This causes a decline in classical caliper sales which is more than compensated by the increase in EPB systems. We sold more than 14 mn EPB systems in 2016.
Market data tires PC and LT replacement tires Europe
2% 0% 0% 2% 2% 2% 2% PC and LT replacement tires North America
0% 1% 1% 5% 2% 2% 2% Commercial vehicle tires OE Europe 0% 4% 5% 5% 6% 5% 3% 3% Commercial vehicle tires OE NAFTA 21% 17% 12% 7%
Commercial vehicle replacement tires Europe
2%
0% 2% 3% 3% 3% Commercial vehicle replacement tires North America 3% 5% 3% 3% 4% 3% 3% 2% Continental PC and LT tires
3% 2% 5% 9% 8% 6% 6% Commercial vehicle tires
0% 3% 5% 7% 8% 4% 4% ContiTech organic sales growth 2% 4% 4% 4% 3% 2% 2% 2%
Top 10 Global OEM Suppliers – 2016 Sales (bn €)
20 30 40 50
1 Robert Bosch only includes Mobility Solutions division 2 Continental not including ContiTech industrial business and
3 ZF excluding Industrial Technology Business 4 Bridgestone including Diversified Products
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
10 20 Robert Bosch Continental Denso ZF Magna Hyundai Mobis Aisin Seiki Bridgestone Michelin Faurecia
43
Source: Company filings. Calendarized to December year-end. Based on average currency exchange rates 2016
1 2 3 4
Automotive Group 2016 €24,496 mn Rubber Group 2016 €16,098 mn Corporation 2016 €40,549 mn
Germany 23% Asia 27% Other countries 2% Germany 18% Asia 13% Other countries 7% Germany 21% Asia 21% Other countries 3% FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 44 Europe (excluding Germany) 23% North America 25% 27% Europe (excluding Germany) 36% North America 26% 13% Europe (excluding Germany) 29% North America 26% 21%
Automotive Group 2016 €2,615 mn Rubber Group 2016 €3,560 mn Corporation 2016 €6,057 mn
Chassis & Safety 36% Interior ContiTech 21% Chassis & Safety 15% ContiTech 12% FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 45 Powertrain 29% Interior 35% Tires 79% Powertrain 12% Interior 15% Tires 46%
Capex by Division 2014 – 2016 (mn €) Capex Distribution by Division 2014 – 2016 245 212 C&S PT I Tires CT 9% 11% 8% C&S PT I Tires CT
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 46
412 470 524 428 468 544 286 336 429 724 658 882 191 245 2014 2015 2016 20% 22% 20% 21% 22% 21% 14% 15% 17% 35% 30% 34% 2014 2015 2016
14.01 0.52 14.53
2,045 2,179 2,593 1,595 1,748 1,818 5.9% 5.6% 6.4%
Capex, Depreciation and PPA1 (mn €) EPS ex PPA1,2 (€)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
EPS reported PPA after tax per share EPS excl. PPA
194 138 144
2014 2015 2016 Capex (PPE), percentage of sales Depreciation, w/o PPA PPA
47
1 Amortization of intangibles from PPA 2 Assuming corporate tax rate of 28%
1 1 1 1,2 2
6.2% 6.9% 4.9% 5.6%
3.2% 2.5%
Cost comparison 2008 to 2016
› Cost of sales declined
by 700 bps
› R&D expenses increased in % of
sales and in absolute terms to €2.8 bn
› Selling and logistics costs up by
70 bps mainly due to expansion of Cost as Percentage of Consolidated Sales
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
80.4% 73.4% FY 2008 FY 2016
Cost of sales R&D expenses Selling and logistics expenses Administrative expenses
48
70 bps mainly due to expansion of tire distribution channels
› Administrative costs down by
70 bps as a percentage of sales
1
1 IAS 19 (rev. 2011) applied
› Continental’s current credit rating is: › Fitch since October 24, 2016: BBB+, outlook stable 4.55 0.38 H1/09 FY 2016 186% 19% H1/09 FY 2016 22% 41% H1/09 FY 2016
Leverage ratio1 Gearing ratio2 Equity ratio2 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
› Fitch since October 24, 2016: BBB+, outlook stable › S&P since May 11, 2016: BBB+, outlook stable › Moody’s since June 30, 2015: Baa1, outlook stable › Continental’s targets: › Rating: BBB / BBB+ › Gearing ratio: <20% › Equity ratio: above 35% › Leverage ratio1: well below 1.00x
49
1 Leverage covenant ratio as defined in syndicated loan agreement; IAS 19 (rev. 2011) applied for 2016 2 IAS 19 (rev. 2011) applied for 2016
4,916 1,444 2,701 4,938 1,771 2,287
2015 2015 before acquisitions 2016 2016 before acquisitions
Cash Flow 2015 – 2016 (mn €) Cash Flow 2016 by Quarter (mn €)
971 489 567 1,011 470 474 983 225 285 1,973 587 961 Q1 Q2 Q3 Q4
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Cash flow from
activities Cash flow used for investing activities Free cash flow
50
Cash flow from
activities Cash flow used for investing activities Free cash flow Free cash flow before acquisitions
Bond
(2.5%) 750 Bond
(3.0%) 746 Various other bank lines 932 Other indebtedness 637
€4,952 mn (PY: €5,245 mn)
€2,107 mn (PY: €1,622 mn)
Bonds 68%1 Various other bank lines 19%1 Other
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Bond
(0.5%) 498 Bond
(0.0%) 595 Bond
(3.125%) 744 Bond
(3.9%) 50
51
€2,798 mn (PY: €3,542 mn)
lines €3,888 mn (PY: €3,612 mn)
Other indebtedness 13%1
1 Percentages are calculated as share of gross indebtedness
(mn €)1 2011 2012 2013 2014 2015 2016 Statement of Cash Flows Adjusted EBITDA2 4,247 4,822 5,094 5,318 6,094 6,125 Reported EBITDA 4,228 4,967 5,095 5,134 6,001 6,057 Net cash interest paid
Tax paid
Change in net working capital3
564
Other4
175 210 250 Cash flow arising from operating activities 2,289 3,785 3,722 4,168 4,916 4,938 Cash flow arising from investing activities
Cash flow before financing activities 491 1,653 1,818 2,015 1,444 1,771
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Cash flow before financing activities 491 1,653 1,818 2,015 1,444 1,771 Statement of Financial Position Cash and cash equivalents 1,541 2,397 2,045 3,244 1,622 2,107 Derivative instruments and interest-bearing investments 249 536 303 364 81 48 Total indebtedness 8,562 8,253 6,638 6,432 5,245 4,952 Net indebtedness 6,772 5,320 4,289 2,824 3,542 2,798 Credit Ratios Net indebtedness / adjusted EBITDA2 1.6x 1.1x 0.8x 0.5x 0.6x 0.5x Net cash interest paid coverage (Ratio)5 6.4x 8.4x 9.5x 33.7x 35.1x 54.8x
52
1 Amounts shown may contain rounding differences 2 Adjusted EBITDA starting 2011 as defined in syndicated loan but IAS 19 (rev. 2011) not applied in 2012 3 Includes changes in inventories, trade accounts receivable, trade accounts payable and discounted notes 4 Includes dividends received, income from at-equity accounted and other investments, incl. impairment and reversal of impairment losses, gains/losses from the disposal of assets,
companies and business operations, other non-cash items as well as changes in employee benefits and other provisions and in other assets and liabilities
5 Adj. EBITDA to net cash interest paid 6 Since 2012
7,515 8,450 8,978
Sales (mn €) EBITDA margin
consolidation and FX effects
€954.6 mn (-17.7%)
€591.7 mn (adj. EBIT1 margin 6.6%)
Chassis & Safety FY 2016
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
13.5% 13.7% 10.6% 9.6% 6.6% 2014 2015 2016
€580.8 mn (EBIT margin 6.5%)
53
1 Before amortization of intangibles from PPA, consolidation and special effects. Refer to Fact Sheets for further details
6,494 7,069 7,320 10.3% 10.3%
Sales (mn €) EBITDA margin
Powertrain FY 2016
1
consolidation and FX effects
€756.2 mn (+3.5%)
€398.5 mn (adj. EBIT1 margin 5.5%)
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
6.8% 10.3% 10.3% 5.7% 5.5% 2014 2015 2016
54
1 Before amortization of intangibles from PPA, consolidation and special effects. Refer to Fact Sheets for further details
€378.0 mn (EBIT margin 5.2%)
7,003 8,155 8,325 13.5% 13.3%
Sales (mn €) EBITDA margin
consolidation and FX effects
€904.2 mn (-16.4%)
€642.0 mn (adj. EBIT1 margin 7.8%)
Interior FY 2016
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
13.5% 13.3% 10.9% 10.0% 7.8% 2014 2015 2016
€567.8 mn (EBIT margin 6.8%)
55
1 Before amortization of intangibles from PPA, consolidation and special effects. Refer to Fact Sheets for further details
9,784 10,409 10,717 23.3% 25.0% 26.4%
Sales (mn €) EBITDA margin
consolidation and FX effects
€2,828.7 mn (+8.6%)
€2,306.0 mn (adj. EBIT1 margin 21.7%)
Tires FY 2016
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
20.1% 21.7% 2014 2015 2016
€2,289.4 mn (EBIT margin 21.4%)
56
1 Before amortization of intangibles from PPA, consolidation and special effects. Refer to Fact Sheets for further details
0% 5% 10% 15%
0% 5% 10% 15%
Replacement Tire Demand Development for PC & LT Europe Replacement Tire Demand Development for PC & LT North America
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 PC & LT Tire Replacement (YOY chg. monthly) Vehicle miles YOY chg. monthly (DOT)
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 PC & LT Tire Replacement (YOY chg. monthly)
57
1 U.S. Department of Transportation
1
0% 10% 20% 30% 0% 10% 20% 30%
Replacement Tire Demand for Truck Tires Europe Replacement Tire Demand for Truck Tires North America
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 Truck tire replacement (YOY chg. monthly) ATA monthly (adj.) YOY
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 Truck tire replacement (YOY chg. monthly) km BAG monthly (adj.)
58
1 BAG = Bundesamt für Güterverkehr 2 ATA = American Trucking Association (miles traveled)
2 1
5,368 5,463
Sales (mn €) EBITDA margin
consolidation and FX effects
€730.9 mn (+26.6%)
€522.4 mn (adj. EBIT1 margin 9.7%)
€399.2 mn (EBIT margin 7.3%)
ContiTech FY 2016
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations
3,931 14.0% 10.8% 13.4% 7.2% 9.7% 2014 2015 2016
€399.2 mn (EBIT margin 7.3%)
59
1 Before amortization of intangibles from PPA, consolidation and special effects. Refer to Fact Sheets for further details
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 60
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 1,878.2 1,868.5 1,823.4 1,944.8 7,514.9 2,136.0 2,142.1 1,999.0 2,172.6 8,449.7 2,201.8 2,246.2 2,176.8 2,352.8 8,977.6 Powertrain 1,579.1 1,598.4 1,638.9 1,677.9 6,494.3 1,826.5 1,819.8 1,657.4 1,764.8 7,068.5 1,813.5 1,841.5 1,775.4 1,889.1 7,319.5 Interior 1,699.1 1,733.9 1,725.4 1,844.1 7,002.5 1,975.2 2,057.0 2,028.2 2,094.4 8,154.8 2,023.0 2,099.8 2,041.2 2,160.7 8,324.7 Tires 2,318.3 2,405.9 2,557.8 2,502.4 9,784.4 2,419.8 2,644.4 2,654.4 2,690.2 10,408.8 2,512.7 2,692.7 2,708.7 2,803.3 10,717.4 ContiTech 973.4 978.6 979.6 999.6 3,931.2 1,268.3 1,418.8 1,330.8 1,349.9 5,367.8 1,359.1 1,376.6 1,350.5 1,376.3 5,462.5 Other / Consolidation
Continental Corporation 8,390.1 8,528.0 8,669.5 8,918.1 34,505.7 9,568.9 10,029.7 9,617.6 10,015.8 39,232.0 9,850.7 10,191.0 9,983.8 10,524.0 40,549.5 2015 2016 Sales (mn €) 2014 2015 2016
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 61
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 13.7 14.6 9.6 11.7 12.4 3.1 4.9 8.9 8.3 6.2 Powertrain 15.7 13.9 1.1 5.2 8.8
1.2 7.1 7.0 3.6 Interior 16.2 18.6 17.5 13.6 16.5 2.4 2.1 0.6 3.2 2.1 Tires 4.4 9.9 3.8 7.5 6.4 3.8 1.8 2.0 4.2 3.0 ContiTech 30.3 45.0 35.9 35.0 36.5 7.2
1.5 2.0 1.8 Continental Corporation 14.0 17.6 10.9 12.3 13.7 2.9 1.6 3.8 5.1 3.4 Changes Y-o-Y in % 2015 2016
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 254.0 242.0 262.0 260.1 1,018.1 297.3 293.4 268.3 301.3 1,160.3 302.8 312.0
354.2 954.6 Powertrain 157.0 125.3
172.9 443.3 177.2 183.5 167.3 202.7 730.7 158.8 201.8 175.5 220.1 756.2 Interior 223.2 244.5 229.7 248.9 946.3 252.9 299.8 252.4 277.1 1,082.2 237.4 252.2 132.5 282.1 904.2 Tires 545.4 591.9 603.5 540.0 2,280.8 579.7 734.6 667.7 622.3 2,604.3 658.1 773.4 658.0 739.2 2,828.7 ContiTech 143.7 132.9 144.7 130.5 551.8 129.2 169.1 159.7 119.2 577.2 176.1 197.2 163.5 194.1 730.9 Other / Consolidation
Continental Corporation 1,295.8 1,310.0 1,203.3 1,324.7 5,133.8 1,403.2 1,633.3 1,491.7 1,473.2 6,001.4 1,505.5 1,713.1 1,077.4 1,761.4 6,057.4 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 13.5 13.0 14.4 13.4 13.5 13.9 13.7 13.4 13.9 13.7 13.8 13.9
15.1 10.6 EBITDA margin in % 2014 2015 2016 EBITDA (mn €) 2014 2015 2016 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 62 Chassis & Safety 13.5 13.0 14.4 13.4 13.5 13.9 13.7 13.4 13.9 13.7 13.8 13.9
15.1 10.6 Powertrain 9.9 7.8
10.3 6.8 9.7 10.1 10.1 11.5 10.3 8.8 11.0 9.9 11.7 10.3 Interior 13.1 14.1 13.3 13.5 13.5 12.8 14.6 12.4 13.2 13.3 11.7 12.0 6.5 13.1 10.9 Tires 23.5 24.6 23.6 21.6 23.3 24.0 27.8 25.2 23.1 25.0 26.2 28.7 24.3 26.4 26.4 ContiTech 14.8 13.6 14.8 13.1 14.0 10.2 11.9 12.0 8.8 10.8 13.0 14.3 12.1 14.1 13.4 Continental Corporation 15.4 15.4 13.9 14.9 14.9 14.7 16.3 15.5 14.7 15.3 15.3 16.8 10.8 16.7 14.9 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 17.0 21.2 2.4 15.8 14.0 1.8 6.3
17.6
Powertrain 12.9 46.4 1,505.9 17.2 64.8
10.0 4.9 8.6 3.5 Interior 13.3 22.6 9.9 11.3 14.4
1.8
Tires 6.3 24.1 10.6 15.2 14.2 13.5 5.3
18.8 8.6 ContiTech
27.2 10.4
4.6 36.3 16.6 2.4 62.8 26.6 Continental Corporation 8.3 24.7 24.0 11.2 16.9 7.3 4.9
19.6 0.9 Changes Y-o-Y in % 2015 2016
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 172.3 159.3 179.5 169.1 680.2 214.9 209.3 181.5 208.6 814.3 213.2 220.3
254.7 580.8 Powertrain 64.5 32.9
69.1
96.7 101.0 81.3 116.6 395.6 66.5 108.8 80.3 122.4 378.0 Interior 137.8 154.7 144.8 168.6 605.9 190.9 234.1 178.7 200.8 804.5 160.1 172.9 51.3 183.5 567.8 Tires 440.7 482.4 486.8 419.5 1,829.4 454.0 604.1 536.5 490.6 2,085.2 530.0 645.4 522.3 591.7 2,289.4 ContiTech 115.5 104.3 115.1 98.4 433.3 54.9 82.3 80.6
170.6 98.7 126.7 88.0 85.8 399.2 Other / Consolidation
Continental Corporation 903.2 906.9 637.8 896.9 3,344.8 977.9 1,183.3 1,034.6 919.8 4,115.6 1,040.7 1,249.6 596.3 1,209.2 4,095.8 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year EBIT margin in % 2014 2015 2016 EBIT (mn €) 2014 2015 2016 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 63 Chassis & Safety 9.2 8.5 9.8 8.7 9.1 10.1 9.8 9.1 9.6 9.6 9.7 9.8
10.8 6.5 Powertrain 4.1 2.1
4.1
5.3 5.6 4.9 6.6 5.6 3.7 5.9 4.5 6.5 5.2 Interior 8.1 8.9 8.4 9.1 8.7 9.7 11.4 8.8 9.6 9.9 7.9 8.2 2.5 8.5 6.8 Tires 19.0 20.1 19.0 16.8 18.7 18.8 22.8 20.2 18.2 20.0 21.1 24.0 19.3 21.1 21.4 ContiTech 11.9 10.7 11.7 9.8 11.0 4.3 5.8 6.1
3.2 7.3 9.2 6.5 6.2 7.3 Continental Corporation 10.8 10.6 7.4 10.1 9.7 10.2 11.8 10.8 9.2 10.5 10.6 12.3 6.0 11.5 10.1 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 24.7 31.4 1.1 23.4 19.7
5.3
22.1
Powertrain 49.9 207.0 130.9 68.7 508.7
7.7
5.0
Interior 38.5 51.3 23.4 19.1 32.8
Tires 3.0 25.2 10.2 16.9 14.0 16.7 6.8
20.6 9.8 ContiTech
79.8 53.9 9.2 281.8 134.0 Continental Corporation 8.3 30.5 62.2 2.6 23.0 6.4 5.6
31.5
Changes Y-o-Y in % 2015 2016
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 215.2 209.4 182.0 208.4 815.0 215.7 223.5
256.2 591.7 Powertrain 98.8 103.0 83.5 119.4 404.7 72.6 116.5 83.8 125.6 398.5 Interior 191.3 234.5 187.0 205.9 818.7 168.0 187.5 60.3 226.2 642.0 Tires 455.6 606.7 540.7 494.2 2,097.2 533.0 647.4 520.0 605.6 2,306.0 ContiTech 82.8 126.5 103.1 75.6 388.0 133.5 152.6 123.0 113.3 522.4 Other / Consolidation
Continental Corporation 1,010.2 1,232.6 1,072.3 1,053.9 4,369.0 1,095.0 1,303.0 645.2 1,298.0 4,341.2 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Chassis & Safety 10.1 9.8 9.1 9.6 9.6 9.8 10.0
10.9 6.6
2015 2016
2015 2016 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 64
1 Before amortization of intangibles from PPA, consolidation and special effects
Chassis & Safety 10.1 9.8 9.1 9.6 9.6 9.8 10.0
10.9 6.6 Powertrain 5.4 5.7 5.0 6.8 5.7 4.0 6.4 4.7 6.7 5.5 Interior 9.7 11.4 9.2 9.8 10.0 8.5 9.1 3.0 10.5 7.8 Tires 18.8 22.9 20.4 18.4 20.1 21.3 24.1 19.4 21.9 21.7 ContiTech 6.5 8.9 7.7 5.6 7.2 10.5 11.1 9.1 8.2 9.7 Continental Corporation 10.6 12.3 11.1 10.5 11.1 11.3 12.9 6.5 12.4 10.8 Q1 Q2 Q3 Q4 Year Chassis & Safety 0.2 6.7
22.9
Powertrain
13.1 0.4 5.2
Interior
9.9
Tires 17.0 6.7
22.5 10.0 ContiTech 61.2 20.6 19.3 49.9 34.6 Continental Corporation 8.4 5.7
23.2
Changes Y-o-Y in % 2016
2016 2015 2014 2016 2015 2014
Q4 Q4 Q4
Sales 40,549.5 39,232.0 34,505.7 10,524.0 10,015.8 8,918.1 Cost of sales
Gross margin on sales 10,766.5 10,175.2 8,666.1 2,759.3 2,567.2 2,217.2 Research and development expenses
Selling and logistics expenses
Administrative expenses
Other expenses and income
Income from at-equity accounted investees 69.7 61.4
20.0 20.9 15.9 Other income from investments 0.5 0.8 1.0 0.1 0.4 0.4 (mn €) FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 65 Other income from investments 0.5 0.8 1.0 0.1 0.4 0.4 Earnings before interest and tax 4,095.8 4,115.6 3,344.8 1,209.2 919.8 896.9 Interest income 101.4 95.4 94.5 27.1 26.1 26.2 Interest expense
Net interest result
Earnings before tax 3,978.8 3,870.0 3,079.5 1,165.8 891.6 847.2 Income tax expense
Net income 2,882.0 2,779.6 2,457.5 811.4 641.1 596.5 Non-controlling interests
2.0
Net income attributable to the shareholders of the parent 2,802.5 2,727.4 2,375.3 785.2 643.1 576.4 Basic earnings per share (in €) 14.01 13.64 11.88 3.92 3.22 2.89 Diluted earnings per share (in €) 14.01 13.64 11.88 3.92 3.22 2.89
Assets in € millions
Goodwill 6,857.3 6,640.6 Other intangible assets 1,514.1 1,336.4 Property, plant and equipment 10,538.1 9,538.9 Investment property 10.3 16.0 Investments in at-equity accounted investees 384.8 345.8 Other investments 43.1 14.1 Deferred tax assets 1,836.1 1,669.7 Defined benefit assets 24.3 18.9 Long-term derivative instruments and interest-bearing investments 19.7 17.1 Long-term other financial assets 66.4 47.6
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations Long-term other assets 26.8 21.5 Non-current assets 21,321.0 19,666.6 Inventories 3,753.2 3,360.1 Trade accounts receivable 7,392.7 6,722.9 Short-term other financial assets 455.5 434.7 Short-term other assets 989.0 803.9 Income tax receivables 124.7 149.7 Short-term derivative instruments and interest-bearing investments 27.8 64.3 Cash and cash equivalents 2,107.0 1,621.5 Assets held for sale 4.0 12.0 Current assets 14,853.9 13,169.1 Total assets 36,174.9 32,835.7 66
Consolidated Statement of Financial Position – Total Equity and Liabilities
Equity and Liabilities in € millions
Subscribed capital 512.0 512.0 Capital reserves 4,155.6 4,155.6 Retained earnings 11,534.7 9,481.8 Other comprehensive income
Equity attributable to the shareholders of the parent 14,270.0 12,786.3 Non-controlling interests 464.8 427.6 Total equity 14,734.8 13,213.9 Long-term employee benefits 4,392.3 3,696.5 Deferred tax liabilities 371.5 361.2 Long-term provisions for other risks and obligations 204.2 171.8 Long-term indebtedness 2,803.7 3,175.0 FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 67 Long-term indebtedness 2,803.7 3,175.0 Long-term other financial liabilities 97.1 94.9 Long-term other liabilities 17.1 21.6 Non-current liabilities 7,885.9 7,521.0 Short-term employee benefits 1,314.1 1,269.4 Trade accounts payable 6,248.0 5,493.8 Income tax payables 783.6 719.8 Short-term provisions for other risks and obligations 1,146.4 845.5 Short-term indebtedness 2,148.6 2,069.8 Short-term other financial liabilities 1,187.3 1,066.4 Short-term other liabilities 726.2 634.1 Liabilities held for sale — 2.0 Current liabilities 13,554.2 12,100.8 Total equity and liabilities 36,174.9 32,835.7
Consolidated Statement of Cash Flows in € millions 2016 2015 Net income 2,882.0 2,779.6 Income tax expense 1,096.8 1,090.4 Net interest result 117.0 245.6 EBIT 4,095.8 4,115.6 Interest paid
Interest received 24.2 31.1 Income tax paid
Dividends received 45.1 48.0 Depreciation, amortization, impairment and reversal of impairment losses 1,961.6 1,885.8 Income from at-equity accounted and other investments, incl. impairment and reversal of impairment losses
Gains/losses from the disposal of assets, companies and business operations
Changes in inventories
trade accounts receivable
trade accounts payable 748.1 400.0 employee benefits and other provisions 384.8 213.4
27.4 Cash flow arising from operating activities 4,938.1 4,915.6
1
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 68
Cash flow from the disposal of property, plant and equipment, and intangible assets 53.0 35.7 Capital expenditure on property, plant and equipment, and software
Capital expenditure on intangible assets from development projects and miscellaneous
Cash flow from the disposal of companies and business operations 4.6 13.8 Acquisition of companies and business operations
Cash flow arising from investing activities
Cash flow before financing activities (free cash flow) 1,771.3 1,443.6 Changes in short-term debt
Proceeds from the issuance of long-term debt 659.7 549.2 Principal repayments on long-term debt
Successive purchases
Dividends paid
Dividends paid to and cash changes from equity transactions with non-controlling interests
Cash and cash equivalents arising from first consolidation of subsidiaries 0.6 0.5 Cash flow arising from financing activities
Change in cash and cash equivalents 516.6
Cash and cash equivalents as at January 1 1,621.5 3,243.8 Effect of exchange rate changes on cash and cash equivalents
31.7 Cash and cash equivalents as at December 31 2,107.0 1,621.5
2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 Sales 8,449.7 8,977.6 7,068.5 7,319.5 8,154.8 8,324.7 10,408.8 10,717.4 5,367.8 5,462.5
39,232.0 40,549.5 EBIT 814.3 580.8 395.6 378.0 804.5 567.8 2,085.2 2,289.4 170.6 399.2
4,115.6 4,095.8
in % of sales 9.6% 6.5% 5.6% 5.2% 9.9% 6.8% 20.0% 21.4% 3.2% 7.3% 10.5% 10.1%
Amortization of intangible assets from PPA 0.8 0.3 8.2 11.5 17.4 38.4 7.8 10.7 103.7 82.7 0.0 0.0 137.9 143.6 Total special effects
1.5 0.9 8.6
26.5 4.2
113.7 37.4 0.0 0.0 115.5 70.3 Total consolidation effects 0.0 9.1 0.0 0.4 0.0 9.3 0.0 9.6 0.0 3.1 0.0 0.0 0.0 31.5 Total consolidation & special effects
10.6 0.9 9.0
35.8 4.2 5.9 113.7 40.5 0.0 0.0 115.5 101.8 Adjusted operating result (adj. EBIT) 1 815.0 591.7 404.7 398.5 818.7 642.0 2,097.2 2,306.0 388.0 522.4
4,369.0 4,341.2 Corporation Interior Chassis & Safety Powertrain Tires ContiTech Cons./Corr.
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 69
Adjusted operating result (adj. EBIT) 1 815.0 591.7 404.7 398.5 818.7 642.0 2,097.2 2,306.0 388.0 522.4
4,369.0 4,341.2
in % of adjusted sales 9.6% 6.6% 5.7% 5.5% 10.0% 7.8% 20.1% 21.7% 7.2% 9.7% 11.1% 10.8%
1 Before amortization of intangibles from PPA, consolidation and special effects
2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 Sales 6,005.3 6,370.1 4,021.8 4,163.7
10,015.8 10,524.0 23,574.5 24,496.4 15,704.6 16,097.6
39,232.0 40,549.5 EBIT 526.0 560.6 443.4 677.5
919.8 1,209.2 2,014.4 1,526.6 2,255.8 2,688.6
4,115.6 4,095.8
in % of sales 8.8% 8.8% 11.0% 16.3% 9.2% 11.5% 8.5% 6.2% 14.4% 16.7% 10.5% 10.1%
Amortization of intangible assets from PPA 10.5 14.4 23.7 24.8 0.0 0.0 34.2 39.2 26.4 50.2 111.5 93.4 0.0 0.0 137.9 143.6 Total special effects
28.7 102.7 7.4 0.0 0.0 99.9 36.1
36.6 117.9 33.7 0.0 0.0 115.5 70.3 Total consolidation effects 0.0 4.3 0.0 9.2 0.0 0.0 0.0 13.5 0.0 18.8 0.0 12.7 0.0 0.0 0.0 31.5 Total consolidation & special effects
33.0 102.7 16.6 0.0 0.0 99.9 49.6
55.4 117.9 46.4 0.0 0.0 115.5 101.8 Automotive Rubber FY 2015/2016 Q4 2015/2016 Cons./Corr. Corporation Automotive Rubber Cons./Corr. Corporation
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 70
Adjusted operating result (adj. EBIT) 1 533.7 608.0 569.8 718.9
1,053.9 1,298.0 2,038.4 1,632.2 2,485.2 2,828.4
4,369.0 4,341.2
in % of adjusted sales 8.9% 9.6% 14.2% 17.4% 10.5% 12.4% 8.6% 6.7% 15.8% 17.8% 11.1% 10.8% 1 Before amortization of intangibles from PPA, consolidation and special effects
BBB+ / Baa1 BBB / Baa2 BBB- / Baa3 BB+ / Ba1
S&P, Fitch / Moody’s
Standard & Poor’s1 Moody’s2 Fitch3
Investment Grade
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 71
1 Contracted rating since May 19, 2000 2 Non-contracted rating since February 1, 2014 3 Contracted rating since November 7, 2013
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
BB+ / Ba1 BB / Ba2 BB- / Ba3 B+ / B1 B / B2 Before Siemens VDO
Non-Investment Grade
Continental Investor Relations website http://www.continental-ir.com Annual and interim reports http://www.continental- corporation.com/www/portal_com_en/themes/ir/financial_reports/ 2016 Fact Book http://www.continental- corporation.com/www/portal_com_en/themes/ir/financial_reports/ Investor Relations events and presentations http://www.continental-corporation.com/www/portal_com_en/themes/ir/events/ Sustainability at Continental (presentation and fact sheet for http://www.continental-ir.com
FY 2016 Results – March 2, 2017 EDMR – Equity and Debt Markets Relations 72
(presentation and fact sheet for investors) Corporate Social Responsibility http://www.continental-sustainability.com Corporate Governance Principles http://www.continental- corporation.com/www/portal_com_en/themes/ir/corporate_governance/ Continental shares http://www.continental-corporation.com/www/portal_com_en/themes/ir/share/ Continental bonds and rating http://www.continental-corporation.com/www/portal_com_en/themes/ir/bonds/ Continental IR mobile website http://continental.ir-portal.de