Roadshow Presentation May/June 2018 Ticker: CON ADR-Ticker: CTTAY Twitter: @Continental_IR http://www.continental-ir.com
Agenda 1 Trends in the Sector of the Automotive Group 3 2 Trends in the Sector of the Rubber Group 10 3 Continental Strategy – Outlook 2020 and Beyond 15 4 Q1 2018 Results 16 5 Back-up and 2016 – Q1 2018 Fact Sheets 45 Roadshow Presentation – May/June 2018 2 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group New Business Opportunities Arise Global Supplier Revenue Pool (bn €) › Revenue pool for suppliers reached more than €1 trn 1,500 in 2017 1,250 › Business related to “established” business will grow by 30% p.a. ~1% p.a. and reach ~€1.1 trn in 2025 1,000 › Revenues share of Electrification 1 , Automated Driving 750 and Holistic Connectivity represented in total <3% in 1% p.a. 2017 500 › Revenue share of Electrification 1 , Automated Driving 250 and Holistic Connectivity will grow by ~30% p.a. to 0 >€200 bn in 2025 2017 2025 › It will account for ~15% of the overall supplier revenue New Business Opportunities market by 2025 Established Business Sources: Roland Berger and Continental estimates. FX rate assumption 1.13 EUR/USD. 1 Not including market for electric vehicle batteries but including hybrid solutions. Roadshow Presentation – May/June 2018 3 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group Four ACES 1 Will Drive Our Growth A utomated Driving Holistic C onnectivity E lectrification TAM 2 in bn € TAM 2 in bn € 4 TAM 2 in bn € 3 S hared Mobility 1) Four ACES: autonomous, connected, electrified and shared mobility Sources: McKinsey and Continental estimates 2) Total Addressable Market 3) Not including market for batteries but hybrid solutions Roadshow Presentation – May/June 2018 4) McKinsey estimates a market for digital services of US70$ - 110 billion in 2025; 4 EDMR - Equity and Debt Market Relations FX rate assumption of 1.13 EUR/USD
1) Trends in the Sector of the Automotive Group The Most Digitalized Portfolio in The Supplier Sector 1 Continental Automotive Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 7 Competitor 8 Competitor 9 Competitor 10 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Today: Electronics/Sensors/SW products as % of sales Continental 2025: Electronics/Sensors/SW products as % of sales 1 Suppliers >€3 bn sales. Source: Company filings and Continental estimates. Roadshow Presentation – May/June 2018 5 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group Approaching Automated Driving: Three-Layer Model Recent additions to the portfolio Market for Automated Driving ~€35 bn 1 by 2025 (incl. cooperations and JVs) ~€26 bn 1 Components Sensors solid-state flash lidar ADCU Electronics easyMile System ~€7 bn 1 Software Integration NVIDIA HUAWEI Software NTT Docomo Environmental Model ~€2 bn 1 Electronics Baidu BMW/Intel platform 1 Source: Continental estimates. Roadshow Presentation – May/June 2018 6 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group Software Drives Architecture, Process and Organization › Increasing computing power will lead to an centralized E/E architecture › Hardware will be separated from software – software integration capabilities are needed › Security supporting approach by multilayered, end-to-end solutions and services required Roadshow Presentation – May/June 2018 7 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group Strong Order Intake Drives Sustainable Growth… Automotive Group: Strong Order Intake (bn €) 40 35 30 >30 28.5 26.6 24.5 23.6 2015 2016 2017 2018E 2019E 2020E 2021E 2022E 1 Automotive Group Sales Order Intake (LTS) 1 Lifetime Sales Roadshow Presentation – May/June 2018 8 EDMR - Equity and Debt Market Relations
1) Trends in the Sector of the Automotive Group … but Causes Sustained High R&D and Capex Automotive Group Capex (€ mn) Automotive Group R&D (€ mn) 2,676 2,431 1,790 2,097 1,836 1,497 1,589 1,275 1,475 1,126 1,036 1,016 10.1% 9.9% 8.8% 8.9% 6.7% 7.9% 5.3% 7.6% 5.1% 5.4% 5.4% 6.1% 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E R&D expenditure (€ mn) R&D as percentage of sales Capex ratio Capex (€ mn) Roadshow Presentation – May/June 2018 9 EDMR - Equity and Debt Market Relations
2) Trends in the Sector of the Rubber Group Tires Division: Four ACES Will Reduce Costs per Mile Traveled Shared Mobility Electrification Economies of scale Fuel efficiency Automated Better safety Connectivity Mobility › Higher utilization of car park › Lower cost per mile traveled › Results in greater access to mobility Roadshow Presentation – May/June 2018 10 EDMR - Equity and Debt Market Relations
2) Trends in the Sector of the Rubber Group Tires Division: Greater Access to Mobility for a Growing World Population More miles traveled Growth of global population Increased global mobility World population Miles per capita Global miles traveled 53% 43% 37% 63% 57% 47% 2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025 Sources: Continental, World Bank, Morgan Stanley, Roland Berger Roadshow Presentation – May/June 2018 11 EDMR - Equity and Debt Market Relations
2) Trends in the Sector of the Rubber Group Tires Division: Strategy 2025 – Globalize Growth (mn units) 1 Roadshow Presentation – May/June 2018 12 EDMR - Equity and Debt Market Relations
2) Trends in the Sector of the Rubber Group ContiTech Division: Relevant Markets and Growth Opportunities Roadshow Presentation – May/June 2018 13 EDMR - Equity and Debt Market Relations
2) Trends in the Sector of the Rubber Group ContiTech Division: Unveiling the Power of Digitalization Roadshow Presentation – May/June 2018 14 EDMR - Equity and Debt Market Relations
3) Continental Strategy – Outlook 2020 and Beyond 2020E: Sales Exceed €50 bn and ROCE More Than 20% >50 Automotive 39 Group >20% 19% 26 21% 14 Rubber 12% Group 2005 2010 2015 2020E 2025E 1 Rubber sales (€ bn) Automotive sales (€ bn) Automotive sales ACES (€ bn) Return on capital employed (ROCE) Global PC & LT 2 2005-2010: 3% 2010-2015: 4% 2015-2020E: 1-2% Production CAGR 1 ACES: Automated Driving, Connectivity, Electrification and Shared Mobility Roadshow Presentation – May/June 2018 2 Passenger car and light truck 15 EDMR - Equity and Debt Market Relations
4) Corporation Highlights Most Important KPIs for Q1 2018 › Sales slightly up to €11.0 bn ; organic sales growth at 4.3%; FX negative at €546 mn Adj. EBIT 1 down by 9% to €1.1 bn ; adj. EBIT 1 margin at 9.7% › (PPA 2 -€42 mn and special effects -€6 mn) NIAT 3 amounted to €738 mn, down by 2% › › Free cash flow amounted to €41 mn Free cash flow before acquisitions amounted to €186 mn › Gearing ratio improved to 12% and equity ratio to 44% Value creation: trailing ROCE 4 down to 19.8% › › Other topics: › Order intake in the Automotive Group increased to €11 bn in Q1 2018 › Change in outlook announced on April 18, 2018 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 Roadshow Presentation – May/June 2018 16 EDMR - Equity and Debt Market Relations
4) Corporation Highlights Divisional Highlights for Q1 2018 Automotive Group Rubber Group › Rubber Group: Organic sales up by 2.3% and adj. EBIT 1 › Automotive Group: Organic sales increased by 5.5%; exceeding global car production by about 7%-points; margin down to 12.9% (PY: 14.9%), negatively impacted adj. EBIT 1 margin at 8.3% (PY: 8.3%) by FX and some inventory revaluation effects › Chassis & Safety: 10.1% adj. EBIT 1 margin › Tires: Adj. EBIT 1 margin down to 15.2% (PY: 18.0%); (PY: 9.6%); organic sales at 6.0%; ADAS unit sales volumes down by 3%; solid price mix at 4%; FX up by 37% impacted tire sales negatively by 5.5%; organic sales up by 1.0% › Powertrain: 5.5% adj. EBIT 1 margin (PY: 6.0%); Tire markets: PC & LT tire replacement demand in organic sales up by 1.5%; adj. EBIT 1 margin before Europe was down by 1% and North America by 2% HEV at >9% › ContiTech: Adj. EBIT 1 margin decreased by 60 bps › Interior: 8.4% adj. EBIT 1 margin (PY: 8.6%); organic to 8.6% (PY: 9.2%); organic sales up by 5.1% driven sales increased by 8.5% again driven by strong by the Conveyor Belt Group and Industrial Fluid demand for multimedia and connectivity products Systems which recovered from depressed levels 1 Before amortization of intangibles from PPA, consolidation and special effects Roadshow Presentation – May/June 2018 17 EDMR - Equity and Debt Market Relations
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