Continental AG: Strategy & Future TrendsContinental AG: Strategy & Future Trends Manfred Wennemer,...

Continental AG:Strategy & Future Trends

Manfred Wennemer,Chairman of the Executive Board

ANE Congress PragueJune 27, 2007

Executive Board

2 / Manfred Wennemer / 2007-07-02 © Continental AG

Continental Corporation 2006

€ 14.9 billion

€ 1,601.9 million

€ 981.9 million

85,224

*Earnings before interest and taxes

Sales

EBIT*

Net income attributable to theshareholders of the parent

Employees

Executive Board


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 millionfor research and development

Executive Board


EBITA

14,8

87.0

13,8

37.2

5,71

9.4

5,33

3.1

0

2000

4000

6000

8000

10000

12000

14000

16000

1996* 1997* 2005** 2006**

Continental Maintains Successful Long-Term Strategy

269.

3

321.

7

1,50

7.1

0

200

400

600

800

1000

1200

1400

1600

1996* 1997* 2005** 2006**

in € millions

* HGB (German Commercial Code)**IFRS

Sales

x 2,60 x 4,98

in € millions

1,60

1.9

Executive Board


TiresLeader

„where it counts“High Performance Tires Winter Tires

ContiTech5 of 7 business units arethe leaders in Europe

Leadership in ‘Fahrverhalten’

Continental Strategy – Unique Constellation of Continental

Focus Products Role

Automotive SystemsOne of the two leaders

worldwideESC / ACC

Interface

Leading intonew markets

TPMS / DDS+ TransponderActive Vibration ControlAir SpringsHybridTelematics

„Fahrverhalten“„Fahrverhalten“

Executive Board


Our Vision

We make individual mobility safer and more comfortable Performance is our passion Creating value is our driving force

Executive Board


Traffic Fatalities & Number of Passenger Vehicles in Germany

* from 1990 incl. new countries; Source: Destatis, KBA

Num

bero

f Tra

ffic

Fata

litie

sin

Tho

usan

ds

Num

ber o

f Pas

seng

er V

ehic

les

in M

illio

ns

0

5

10

15

20

25

0

10

20

30

40

50

1953

1955

1960

1965

1970

1975

1980

1985

1990

*

1995

2000

2005

Safety belt

ABS

Airbag ESC

Executive Board


Electronic Stability Control (ESC) Installation Rates

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Europe

NorthAmerica

Japan

NHTSArule making

ESC installation rate of pass. light vehicles beingproduced in the region

Executive Board


Brake AssistanceCrash Preparation

Electronic Control Units and Sensorsfor Airbags

Car-to-car Compatibility AdjustmentsCar-to-Car CommunicationMan-Machine-Interface Adaptation

Passive Safety

E-CallEmergency RescueRoadside Assistance

In-Crash Post-CrashNormal Driving

= Automotive Systems current safety competence

= Motorola’s Automotive Electronics Business currenttelematics competence

= New Automotive Systems additional safety competence

Crash

Comfort ElectronicsElectronic Brake SystemGlobal Chassis Control

Remote Door UnlockStolen Vehicle TrackTraffic InformationNavigationHands-Free PhoningMobile Device AccommodationRemote Maintenance

APIA – Active Passive Integration Approach

Pre-Crash

Enhanced Emergency Rescue

Crash Type Data (Rollover)

Car-to-Car/Car-to-Infrastructure CommunicationEnhanced Collision Avoidance

Active Safety

Executive Board


Telematics

Continental Innovation

eCallAirbagSeatbelt Pre-tensioning

Passive Safety Components

Consumer Infotainment Outside World

Active Safety Components

Sensor Assy.Cluster, F/RForce Feedback Pedal

RadarCameraStability ControlLane Change Warning Blind Spot Detection

GPS Location InfoNetworkingOTA programmingNav map, Info, Traffic2 way Communications Cell,DSRC, Mesh

Portable Devices

Executive Board


APIA Telematics - Car2X Communication

Continental is working with the Car 2 Car Communication Consortium for standardization

www.car-to-car.org

Executive Board


Continental Contributions

Reduction of CO2 emission

Saving Resources

Driving pleasure by improved dynamics

Executive Board


100% 100% 100% 100%

72,2%

60,7%

71,8% 69,4%

0%

20%

40%

60%

80%

100%

Energy Consumption Water Consumption Waste Production CO2 Emissions

2001 2005

Process Improvements (Per Ton Finished Goods)

Executive Board


EU CO2 Emission Target for 2012

* average for new cars sold today, according to NEDC** EU commission target proposal EurActiv Feb. 2nd, 2007

Motor Technologies:PowertrainHybrid DrivesChassisLow Drag

- 33 g/km

- 10 g/km

163 g/km*

130 g/km

120 g/km**

Others:TelematicsTire Pressure MonitoringTire Roll ResistanceBio Fuel blending

Executive Board


Continental Innovations Reduce CO2 Emissions by 4-5% + Hybrid

Hybrid drive incl. respective componentsExhaust gas after treatment (hoses)Timing belt in oil for chain substitution (Conti Oil Runner)

Powertrain

Brake System

Tires

Miscellaneous

Reduced weight of brake calipers, brake discs,brake actuations, ESC unitsRegenerative brake system (part of hybrid)Reduction / elimination of residual brake torque

Reduction of weight and rolling resistanceTire pressure monitoring systems (TPMS, DDS etc.)

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

CO2 Reduction by

CO2 Reduction by

CO2 Reduction by

CO2 Reduction by

Executive Board


Clutches, Torsion dampers functions

Engine control unitEnergy storage system functions

Regenerativebrake functions

Transmission functions

HybridSystem

Hybrid Transmission

HybridModule

Hybrid Components

Hybrid Components & Parallel Hybrid Systems - System Approach

Electric motor Power electronics functions

Executive Board


Production of all Automobile Manufacturers

Source: Global Insight

Western Europe

Germany

Asia

Eastern Europe5

10

15

20

25

30

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

in mill. units

Focus:Growing RegionEastern Europe

Focus: Growing RegionASIA

Nafta

Executive Board


Source: Global Insight

Western Europe

Germany

Asia

Eastern Europe

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

in Mill.

Focus:Growing RegionEastern Europe

Focus: Growing RegionASIA

Nafta

5

10

15

20

25

30

ConclusionConclusion::

ConsistentConsistent DevelopmentDevelopmentin in AsiaAsia and Eastern Europeand Eastern Europe

Executive Board


Definition of ‚Low Cost Car‘

€5,000

€3000

€10,000

WesternEurope

IndiaChinaEasternEurope

Japan

Low Cost CarMature Market

Low Cost CarEmerging Market

Germany: VW Fox Eastern Europe:Dacia Logan

China: Cherry QQ

India: Tata (SOP 2008)

India: Maruti 800

Executive Board


Global Light Vehicle Production

2007 2017Low Cost Cars < 10.000 €

Light Vehicle Production (in mill. units)

5

10

15

20

25

30

35

40

Asia EasternEurope

WesternEurope

NorthAmerica

SouthAmerica

Asia EasternEurope

WesternEurope

NorthAmerica

SouthAmerica

Source: Global Insight 03/2007

Executive Board


Objective 2007

5% Growth without acquisitions5% Growth without acquisitions

Executive Board


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)

Executive Board


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)

Executive Board


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

Executive Board


Europe Rest of World

* Based on sales** Based on units

‘Cost Consciousness’ – Production in Low-Cost Countries

61%

52%

11%

22%

65%

54%

23%

17%18%

26%

66%

56%

AutomotiveSystems*

PLT** CVT** ContiTech*

2004 2005 2006PLT = Passenger and Light Truck TiresCVT= Commercial Vehicle Tires

18%

29%

39%

45%

15%

44%

52%

36%

41%

52%

17%

55%

AutomotiveSystems*

PLT** CVT** ContiTech*

Executive Board


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).

Executive Board


Continental AG:�Strategy & Future Trends��Manfred Wennemer,�Chairman of the Executive Board��ANE Congress Prague�June 27, 2007Continental Corporation 2006Continental Corporation 2006Continental Maintains Successful Long-Term StrategyContinental Strategy – Unique Constellation of ContinentalOur VisionTraffic Fatalities & Number of Passenger Vehicles in GermanyElectronic Stability Control (ESC) Installation RatesAPIA – Active Passive Integration Approach TelematicsAPIA Telematics - Car2X CommunicationContinental ContributionsProcess Improvements (Per Ton Finished Goods)EU CO2 Emission Target for 2012Continental Innovations Reduce CO2 Emissions by 4-5% + HybridHybrid Components & Parallel Hybrid Systems - System ApproachProduction of all Automobile Manufacturers Definition of ‚Low Cost Car‘Global Light Vehicle ProductionObjective 2007Production in Eastern EuropeProduction in AsiaAcquisitions in the Past Months‘Cost Consciousness’ – Production in Low-Cost CountriesOutlook 2007

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