DGAP-News: Continental AG / Key word(s): 9-month figures Continental Accelerates Growth 10.11.2016 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Continental Accelerates Growth - Automotive Group further steps up growth - Continued positive sales and earnings development in the Rubber Group - EBIT negatively impacted by several isolated events - Free cash flow before acquisitions above EUR1.3 billion despite increase in capital expenditure - Strong earnings expected in final quarter Hanover, November 10, 2016. The international technology company Continental accelerated its growth in the third quarter of 2016 as announced. However, the quarter was characterized by several isolated and unrelated circumstances in the Automotive divisions that had a negative impact on earnings. "The sales growth in our automotive business gained momentum in the third quarter. With organic growth of over 6 percent, we once again grew faster than the market with our solutions for safe, efficient and intelligent driving," said Dr. Elmar Degenhart, Continental's chairman of the Executive Board, at the presentation of the business figures for the first nine months of the year on Thursday. This growth momentum is also reflected in the order intake in the Automotive Group, with orders for electronics, sensors, software and other components climbing by 15 percent year-on-year to EUR25 billion over the respective life time. With organic growth of 4 percent in the first nine months, the Rubber Group also continued its growth trajectory, albeit at a slower pace. EBIT after nine months increased to a total of EUR2.9 billion. As reported on October 17, 2016, it was negatively impacted by several isolated events in the third quarter. Warranty cases, pending antitrust proceedings and increased research and development expenses resulted in a negative effect on the reported and adjusted EBIT of the three Automotive divisions for the current year amounting to around EUR480 million. In the third quarter alone, these isolated events had a negative impact of EUR450 million on the Automotive Group's earnings. The technology company however anticipates strong earnings in the final quarter of 2016. Key Figures for January 1 to September 30 Third Quarter the Continental Corporation in EUR millions 2016 2015 ∆ in % 2016 2015 ∆ in % Sales 30,025.5 29,216.2 2.8 9,983.8 9,617.6 3.8 EBIT 2,886.6 3,195.8 -9.7 596.3 1,034.6 -42.4 in % of sales 9.6 10.9 6.0 10.8 Net income 2,017.3 2,084.3 -3.2 378.5 635.7 -40.5 attributable to the shareholders of the parent Earnings per 10.09 10.42 -3.2 1.90 3.18 -40.5 share in EUR Adjusted sales1 29,794.2 29,216.2 2.0 9,947.5 9,617.6 3.4 Adjusted 3,043.2 3,315.1 -8.2 645.2 1,072.3 -39.8 operating result (adjusted EBIT)2 in % of adjusted 10.2 11.3 6.5 11.1 sales Free cash flow 1,184.0 315.9 225.0 33.9 Net indebtedness 3,298.4 4,296.2 as at September 30 Gearing ratio in 24.3 33.9 % Number of 218,601 208,138 employees as at September 303 1 Before changes in the scope of consolidation. 2 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects. 3 Excluding trainees. Free cash flow before acquisitions after the first nine months of 2016 amounted to more than EUR1.3 billion and was thus EUR209 million lower than in the previous year. "Free cash flow before acquisitions decreased compared to the previous year only due to the year-on-year rise in capital expenditure of EUR288 million. We are using these investments to increase our capacity for growth in the years ahead," explained CFO Wolfgang Schäfer. As at September 30, 2016, net indebtedness was down significantly by EUR998 million compared to the previous year. Compared to December 31, 2015, it was down by EUR244 million. "The gearing ratio after nine months was 24.3 percent after 33.9 percent at the same point of the previous year. Our equity ratio is 38.8 percent. Continental's financial strength was recently reconfirmed by the rating agencies," said Schäfer. Fitch recently upgraded its rating for Continental to BBB+. As at the end of the third quarter of 2016, Continental had liquidity reserves totaling EUR5.1 billion, consisting of cash and cash equivalents of EUR1.4 billion and committed, unutilized credit lines totaling EUR3.7 billion. Net interest result improved by EUR144 million year-on-year to EUR74 million in the first nine months of 2016. "Owing to the interest and exchange rate development, we now anticipate the net interest result to total less than EUR170 million for the year as a whole, after previously having expected it to be better than EUR250 million," Schäfer explained. In the first three quarters, Continental invested EUR1.6 billion in property, plant and equipment, and software. As a result, the capital expenditure ratio amounted to 5.3 percent after 4.5 percent in the comparative period of the previous year. After the first three quarters of 2016, research and development expenses increased to 7.2 percent of consolidated sales after 6.5 percent in the comparative period of the previous year. In a technological environment undergoing a structural transformation, Continental is laying the foundations for the company's growth in the coming years. On September 30, 2016, the corporation had more than 218,000 employees. This represents an increase of 10,700 compared to the end of 2015. The number of employees in the Automotive Group has risen by almost 7,900 since the beginning of the year as a result of increased production volumes and expansion of research and development. In the Rubber Group, further expansion of production capacity and sales channels led to an increase of more than 2,800 employees. In the first nine months of this year, the Automotive Group achieved sales of EUR18.1 billion. The adjusted EBIT margin amounted to 5.7 percent as a result of the isolated events described above. In the first three quarters of 2016, the Rubber Group generated sales of EUR11.9 billion and improved the adjusted EBIT margin to 17.9 percent. Continental develops intelligent technologies for transporting people and their goods. As a reliable partner, the international automotive supplier, tire manufacturer, and industrial partner provides sustainable, safe, comfortable, individual, and affordable solutions. In 2015, the corporation generated sales of EUR39.2 billion with its five divisions, Chassis & Safety, Interior, Powertrain, Tires, and ContiTech. Continental currently employs more than 218,000 people in 55 countries. Contact for journalists Henry Schniewind Spokesman, Business & Finance Continental AG Phone: +49 511 938-1278 Cell: +49 151 688 64 262 E-mail: [email protected] Vincent Charles Vice President, Media Relations Continental AG Phone: +49 511 938-1364 Cell phone: +49 173 314 50 96 E-Mail: [email protected] This press release is available in the following languages: Chinese, Czech, Dutch, English, French, German, Hungarian, Japanese, Korean, Portugese (Brazil), Portuguese (Portugal), Romanian, Russian, Slovakian, Spanish Links Press portal: www.continental-presse.de Financial reports: www.continental-ir.de Video portal: http://videoportal.continental-corporation.com Media database online: www.mediacenter.continental-corporation.com --------------------------------------------------------------------------- 10.11.2016 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- 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; Luxemburg, SIX End of News DGAP News Service --------------------------------------------------------------------------- 519261 10.11.2016