18.07.2018
Continental AG DE0005439004
DGAP-Adhoc: Continental Realigns for Future Mobility
DGAP-Ad-hoc: Continental AG / Key word(s): Strategic Company Decision
Continental Realigns for Future Mobility
18-Jul-2018 / 13:54 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation
(EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Notification required under Section 17 (1) Market Abuse Regulation (MAR)
Hanover, July 18, 2018. On January 9, 2018, as market rumors arose,
Continental AG confirmed in a notification required under section 17 (1) MAR
that it is in the early stages of analyzing how its organization could
become even more flexible in response to the fast changing environment in
the automotive industry.
After completion of the analysis, the Executive Board of the technology
company decided today to undertake one of the largest organizational
realignments in the company's history.
The decision provides for the creation of a holding structure of Continental
AG under the new "Continental Group" umbrella brand. The Holding Structure
will be supported by three pillars, the "group sectors" Continental Rubber,
Continental Automotive and Powertrain. The new names and the corresponding
reporting structure will applied starting 2020. The group sectors will be
established, or adjusted where necessary, step by step. This realignment
requires the approval of Continental AG's Supervisory Board, which is to be
obtained on July 26, 2018. The Supervisory Board's Approval is also required
for the carve-out of the current Powertrain division into an independent
entity under a new name by the beginning of 2019. Its partial public
offering (IPO) is possible beginning mid-2019.
Furthermore, the current Chassis & Safety and Interior divisions will be
reorganized by the beginning of 2020. They will become two business areas
newly named "Autonomous Driving Technologies" and "Vehicle Networking
Technologies". Their business results will be reported in the new group
sector Continental Automotive. Both business areas will be supported by a
newly created central Automotive Research and Development function.
The independent organizational structure of the two current Tires ("Tire
Technologies" in the future) and ContiTech divisions will remain unchanged.
Their business results will be reported under the future Continental Rubber
group sector.
Powertrain business aligned to meet the requirements of markets and
customers
Subject to the approval of Continental AG's Supervisory Board, the
Powertrain division will be carved out into an independent business area
under a new name by the beginning of 2019. In addition to the combustion
engine business, this new entity will also be in charge of all business of
the future involving hybrid and electric drive systems, as well as current
battery activities. This includes, for instance, the joint venture for
48-volt battery systems recently announced. At the same time, Continental is
preparing a partial IPO for the new Powertrain company, which could take
place starting mid-2019. Continental does not, however, plan to relinquish
control of the Powertrain business in the medium or long term. Andreas Wolf
is to assume responsibility for the new Powertrain company at the beginning
of 2019. He is currently in charge of the Body and Security business unit in
the Interior division.
The carve-out of the Powertrain group sector will lead to estimated
operational costs of approximately EUR350 million. A large part of the
operational costs will be incurred in 2018 and 2019. There will also be
negative tax effects totaling about EUR100 million. These will be incurred
primarily in 2019. The outlook for the Continental Corporation for 2018 is
unaffected by this.
The key points agreed upon with the employee representatives in "Continental
in Motion - our Alliance for the Future" on April 18, 2018, apply to the
planned organizational changes at Powertrain.
The reason for creating a new independent entity is the foreseeable change
in the powertrain business. The way the market evolves will largely be
determined by political demands regarding emission limits. The pace at which
political decision-makers are pushing regulations varies, particularly in
key markets, including Europe, North America and China, as well as Japan and
South Korea, and growth markets such as India. This requires a great deal of
flexibility on the part of the industry in order to be able to react quickly
to the individual needs of the various markets, regulatory authorities,
societies and customers.
Reorganization of the Chassis & Safety and Interior divisions
The business and activities of the two other current Automotive divisions
Chassis & Safety and Interior will be realigned with the changing
requirements and future opportunities of the markets. By the start of 2020,
these operations will be organized in two newly formed business areas with
the names "Autonomous Driving Technologies" and "Vehicle Networking
Technologies".
The Autonomous Driving Technologies business area will include automated and
autonomous driving as well as all chassis functions. The Vehicle Networking
Technologies business area will deal with a vehicle's internal connectivity
as well as its external connectivity with other vehicles and traffic
infrastructures. The details are expected to be worked out and announced by
mid-2019.
With this reorganization, Continental is above all pursuing the goal of
gearing its business with pioneering technologies toward continuing
profitable growth, while exploiting this and future growth opportunities
faster and more efficiently. In its new automotive business (without the
Powertrain division), the technology company expects to increase sales from
about EUR19 billion in 2017 to approximately EUR30 billion in 2023.
The creation of a central Automotive R&D function will support the
realignment of the automotive business. In this new function, development
activities of the current Interior and Chassis & Safety divisions as well as
the R&D operations of the current central functions will be integrated,
where they will play a more crucial role and be strengthened at the
operational level. Approximately 12,000 to 15,000 software and hardware
engineers will join together in a global Continental powerhouse for advanced
development and application engineering. In addition, about 17,000 engineers
will remain in the two new business areas Autonomous Driving Technologies
and Vehicle Networking Technologies.
Rubber group: Continental retains ownership of its nucleus
The Tire and ContiTech divisions currently make up the Rubber Group, which
in the future will be reported under the new name "Continental Rubber Group
Sector". The two business areas will continue to specialize in the
development of technology products based upon rubber and plastics.
This business, which is the nucleus and origin of the 147-year-old
Hanover-based company, will continue to be owned by Continental. The sale of
a minority interest, in the form of an IPO for example, is not planned at
present, but is an option for the future. Several years ago Continental
already prepared a possible transformation of this business into an
independent entity. No further steps are necessary for this at present.
Contact:
Person making the notification: Rolf Woller, Head of IR
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Archive at www.dgap.de
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Language: English
Company: Continental AG
Vahrenwalder Straße 9
30165 Hannover
Germany
Phone: +49 (0)511 938-1068
Fax: +49 (0)511 938-1080
E-mail: [email protected]
Internet: www.conti.de
ISIN: DE0005439004
WKN: 543900
Indices: DAX
Listed: Regulated Market in Frankfurt (Prime Standard), Hamburg,
Hanover, Stuttgart; Regulated Unofficial Market in Berlin,
Dusseldorf, Munich, Tradegate Exchange; Luxembourg Stock
Exchange, SIX
End of Announcement DGAP News Service
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