Continental AG: Strategy & Future Trends Manfred Wennemer, Chairman of the ANE Congress Prague June 27, 2007
Continental Corporation 2006 Sales EBIT* Net income attributable to the shareholders of the parent Employees 14.9 billion 1,601.9 million 981.9 million 85,224 *Earnings before interest and taxes 2 / Manfred Wennemer / 2007-07-02 Continental AG
Continental Corporation 2006 Approx. 800 million spent on acquisitions 630 million transferred to contractual trust arrangement Approx. 800 million invested Innovative strength further reinforced with some 680 million for research and development 3 / Manfred Wennemer / 2007-07-02 Continental AG
Continental Maintains Successful Long-Term Strategy 16000 14000 12000 10000 Sales 13,837.2 in millions 14,887.0 1600 1400 1200 EBITA x 2,60 x 4,98 1000 1,507.1 in millions 1,601.9 8000 800 6000 600 4000 5,333.1 5,719.4 400 2000 0 1996* 1997* 2005** 2006** 200 0 269.3 321.7 1996* 1997* 2005** 2006** * HGB (German Commercial Code) **IFRS 4 / Manfred Wennemer / 2007-07-02 Continental AG
Continental Strategy Unique Constellation of Continental Focus Products Role Automotive Systems ESC / ACC One of the two leaders worldwide Fahrverhalten Interface TPMS / DDS+ Transponder Active Vibration Control Air Springs Hybrid Telematics Leading into new markets Tires High Performance Tires Winter Tires ContiTech 5 of 7 business units are the leaders in Europe Leader where it counts Leadership in Fahrverhalten 5 / Manfred Wennemer / 2007-07-02 Continental AG
Our Vision We make individual mobility safer and more comfortable Performance is our passion Creating value is our driving force 6 / Manfred Wennemer / 2007-07-02 Continental AG
Traffic Fatalities & Number of Passenger Vehicles in Germany 25 50 Number of Traffic Fatalities in Thousands Number of Passenger Vehicles in Millions 20 15 Safety belt 10 5 ABS Airbag ESC 40 30 20 10 0 0 1953 1955 1960 1965 1970 1975 1980 1985 1990* 1995 2000 2005 * from 1990 incl. new countries; Source: Destatis, KBA 7 / Manfred Wennemer / 2007-07-02 Continental AG
Electronic Stability Control (ESC) Installation Rates 100% 90% 80% 70% 60% 50% 40% 30% ESC installation rate of pass. light vehicles being produced in the region North America Europe Japan 20% 10% NHTSA rule making 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 8 / Manfred Wennemer / 2007-07-02 Continental AG
APIA Active Passive Integration Approach Car-to-Car/ Car-to-Infrastructure Communication Enhanced Collision Avoidance = Automotive Systems current safety competence = Motorola s Automotive Electronics Business current telematics competence = New Automotive Systems additional safety competence Remote Door Unlock Stolen Vehicle Track Traffic Information Navigation Hands-Free Phoning Mobile Device Accommodation Remote Maintenance Car-to-car Compatibility Adjustments Car-to-Car Communication Man-Machine- Interface Adaptation Crash Type Data (Rollover) Enhanced Emergency Rescue Comfort Electronics Electronic Brake System Global Chassis Control Brake Assistance Crash Preparation Electronic Control Units and Sensors for Airbags E-Call Emergency Rescue Roadside Assistance Active Safety Crash Passive Safety Normal Driving Pre-Crash In-Crash Post-Crash 9 / Manfred Wennemer / 2007-07-02 Continental AG
Telematics Consumer Infotainment Outside World Portable Devices Passive Safety Components Continental Innovation GPS Location Info Networking OTA programming Nav map, Info, Traffic 2 way Communications Cell, DSRC, Mesh Active Safety Components ecall Airbag Seatbelt Pre-tensioning Radar Camera Stability Control Lane Change Warning Blind Spot Detection Sensor Assy. Cluster, F/R Force Feedback Pedal 10 / Manfred Wennemer / 2007-07-02 Continental AG
APIA Telematics - Car2X Communication Continental is working with the Car 2 Car Communication Consortium for standardization www.car-to-car.org 11 / Manfred Wennemer / 2007-07-02 Continental AG
Continental Contributions Reduction of CO 2 emission Saving Resources Driving pleasure by improved dynamics 12 / Manfred Wennemer / 2007-07-02 Continental AG
Process Improvements (Per Ton Finished Goods) 100% 100% 100% 100% 100% 80% 60% 72,2% 60,7% 71,8% 69,4% 40% 20% 0% Energy Consumption Water Consumption Waste Production CO2 Emissions 2001 2005 13 / Manfred Wennemer / 2007-07-02 Continental AG
EU CO 2 Emission Target for 2012 163 g/km* - 33 g/km Motor Technologies: Powertrain Hybrid Drives Chassis Low Drag 130 g/km 120 g/km** - 10 g/km Others: Telematics Tire Pressure Monitoring Tire Roll Resistance Bio Fuel blending * average for new cars sold today, according to NEDC ** EU commission target proposal EurActiv Feb. 2nd, 2007 14 / Manfred Wennemer / 2007-07-02 Continental AG
Continental Innovations Reduce CO 2 Emissions by 4-5% + Hybrid Powertrain Brake System Tires Miscellaneous CO 2 Reduction by Hybrid drive incl. respective components Exhaust gas after treatment (hoses) Timing belt in oil for chain substitution (Conti Oil Runner) CO 2 Reduction by Reduced weight of brake calipers, brake discs, brake actuations, ESC units Regenerative brake system (part of hybrid) Reduction / elimination of residual brake torque CO 2 Reduction by Reduction of weight and rolling resistance Tire pressure monitoring systems (TPMS, DDS etc.) CO 2 Reduction by Optimized traffic flow through telematics, ACC etc. Power-on-demand units (e.g. electric vacuum pump) Permeation-free hoses for passenger car A/C systems 15 / Manfred Wennemer / 2007-07-02 Continental AG
Hybrid Components & Parallel Hybrid Systems - System Approach Hybrid Components Hybrid Module Hybrid Transmission Hybrid System Electric motor Power electronics functions Clutches, Torsion dampers functions Regenerative brake functions Transmission functions Energy storage system functions Engine control unit 16 / Manfred Wennemer / 2007-07-02 Continental AG
Production of all Automobile Manufacturers 30 25 in mill. units Asia Focus: Growing Region ASIA 20 Western Europe 15 Nafta 10 5 Germany Eastern Europe Focus: Growing Region Eastern Europe 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Global Insight 17 / Manfred Wennemer / 2007-07-02 Continental AG
30 25 in Mill. Asia Focus: Growing Region ASIA 20 Conclusion: Western Europe 15 Nafta 10 5 Consistent Development in Asia Asia and Eastern Germany Europe Focus: Growing Region Eastern Europe Eastern Europe 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Global Insight 18 / Manfred Wennemer / 2007-07-02 Continental AG
Definition of Low Cost Car 10,000 Low Cost Car Mature Market Germany: VW Fox Eastern Europe: Dacia Logan China: Cherry QQ India: Maruti 800 5,000 Low Cost Car Emerging Market 3000 Western Europe Japan Eastern Europe China India India: Tata (SOP 2008) 19 / Manfred Wennemer / 2007-07-02 Continental AG
Global Light Vehicle Production 40 35 30 Light Vehicle Production (in mill. units) 2007 2017 Low Cost Cars < 10.000 25 20 15 10 5 Asia Eastern Europe Western Europe North America South America Asia Eastern Europe Western Europe North America South America Source: Global Insight 03/2007 20 / Manfred Wennemer / 2007-07-02 Continental AG
Objective 2007 5% Growth without acquisitions 21 / Manfred Wennemer / 2007-07-02 Continental AG
Production in Eastern Europe Czech Republic: Otrokovice, Partizanske, Jicin (6,267 employees) Slovakia: Puchov, Zvolen (1,802 employees) Romania: Timisoara (50th million tires), Sibiu (5th million control units), Carei (2,754 employees) Hungary: Budapest, Veszprem, Vac, Mako, Nyiregyhaza, Szeged (4,343 employees) 22 / Manfred Wennemer / 2007-07-02 Continental AG
Production in Asia China: Lianyungang, Shanghai, Chanchun, Changzhi, Ningbo, Ninghai, Tianjin, Zhangiiagang (3,051 employees) Japan: Yokohama, Monbetsu, Asahi, Hamakita, Hiroshima (866 employees) Malaysia: Petaling, Alor Setar, Kulim (3,034 employees) India: Calcutta, Delhi, Bangalore (928 employees) Korea: Seoul, Busan (267 employees) Philippines: Manila, Calamba (1,488 employees) Taiwan: Tainan (15 employees) 23 / Manfred Wennemer / 2007-07-02 Continental AG
Acquisitions in the Past Months Acquisition Focus 51% of Matador Rubber Group Eastern Europe Automotive electronics business from Motorola North America Roulunds Rubber Group Asia VTI Technologies Asia, North America 24 / Manfred Wennemer / 2007-07-02 Continental AG
Cost Consciousness Production in Low-Cost Countries Europe Rest of World 65% 66% 61% 52% 52% 55% 54% 56% 52% 45% 44% 41% 39% 36% 29% 26% 22% 23% 17% 18% 18% 17% 15% 11% Automotive Systems* PLT** CVT** ContiTech* Automotive Systems* PLT** CVT** ContiTech* 2004 2005 2006 PLT = Passenger and Light Truck Tires CVT= Commercial Vehicle Tires * Based on sales ** Based on units 25 / Manfred Wennemer / 2007-07-02 Continental AG
Outlook 2007 We expect 2007 to see an increase in consolidated sales of at least 5%. a further improvement in the operating result. a positive free cash flow before potential acquisitions. In 2007 we intend to spend approximately 4.6% of sales on research and development. to invest approximately 6% of sales. to achieve a better balance sheet structure (acquisitions, organic growth, higher dividend). 26 / Manfred Wennemer / 2007-07-02 Continental AG
27 / Manfred Wennemer / 2007-07-02 Continental AG