DGAP-News: Continental Achieves Targets and Anticipates Sales of Around EUR37.5 Billion in 2015


DGAP-News: Continental AG / Key word(s): Preliminary Results/Dividend
Continental Achieves Targets and Anticipates Sales of Around EUR37.5
Billion in 2015

05.03.2015 / 08:30

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  - Net income for 2014 improves to almost EUR2.4 billion / EUR11.88 per
    share
  - Dividend up 30 percent to EUR3.25
  - Target achieved with sales of EUR34.5 billion despite headwind from
    foreign exchange effects
  - Net indebtedness at lowest level since 2006 / free cash flow of EUR2.0
    billion
  - Adjusted EBIT of EUR3.9 billion / adjusted EBIT margin of 11.3 percent
  - Successful start to 2015 
  - Targets for 2020: Sales of over EUR50 billion with double-digit EBIT
    margin

Hanover, March 5, 2015. The Continental Corporation achieved its annual
targets in 2014 while also fulfilling several long-term objectives. As a
technology leader the company generated sales of EUR34.5 billion as
targeted and achieved an adjusted margin of 11.3 percent. The return on
capital employed (ROCE) came to exactly 20 percent in 2014, thus having
risen for the fifth year in a row. Net indebtedness decreased further by
almost EUR1.5 billion to approximately EUR2.8 billion. The gearing ratio at
the end of the year was 25.6 percent.

For the current fiscal year, Continental aims to achieve a rise in sales of
almost 9 percent to around EUR37.5 billion, which includes a contribution
of at least EUR1.3 billion from the first-time consolidation of the
acquired company Veyance Technologies. The way things look now, it appears
that positive exchange rate effects could contribute an additional EUR1
billion to sales. The EBIT margin is expected to exceed 10.5 percent in
2015. Growth impetus is anticipated from Asia again, particularly China,
and from North America. For 2015, Continental expects global production of
vehicles weighing up to six tons to total approximately 89 million units.

"Continental has had a good start into 2015, thus confirming our
expectations for the entire year," said Chairman of the Continental
Executive Board, Dr. Elmar Degenhart, at the presentation of the
preliminary business figures in Hanover on Thursday. "We are pleased to
look back at another extremely successful financial year 2014, during which
we achieved our targets."

Degenhart continued: "When evaluating the results, we should not forget the
fact that there was, in some cases, very weak growth in Europe, Russia, and
South America. There were also significant exchange rate fluctuations. In
addition, the mild winter at the end of 2014 had a negative impact on the
winter tire business in Europe. The driving force behind the sales
development once again came from China and North America. In light of this,
it is remarkable that profit after taxes of just under EUR2.4 billion or
EUR11.88 per share could be achieved. On this basis, we intend to increase
the dividend for the third time in a row. We are proposing a distribution
of EUR3.25 per share, corresponding to a dividend payout ratio of 27.4
percent, which is up slightly on the previous year's level."

"Another noteworthy aspect is the strong free cash flow of more than EUR2
billion. This enabled us to reduce net indebtedness to its lowest level
since 2006. At the same time, we invested more than EUR4 billion in
property, plant and equipment, software, and research and development,"
said Degenhart.

Installation of electronics and software will see continued strong growth

During the "Continental Webcast: Fiscal Year 2014" - the first fully
digital press conference of a DAX30 company's fiscal results - Degenhart
also outlined plans for the development of the company up until 2020: "We
are focusing on the increasing need for mobility and growing demand from
our industrial customers. The production volume for vehicles weighing up to
six tons is expected to rise to between 100 million and 105 million
vehicles. Furthermore, installation of electronics and software will
continue to grow substantially, driven by growing demands from end-users
and increasingly strict legal requirements for safety and energy
consumption. It is partly on this basis that we are aiming for profitable
sales of over EUR50 billion in 2020," explained Degenhart.

EBIT grow to EUR3.3 billion

In 2014, the Continental Corporation increased its sales by 3.5 percent to
EUR34.5 billion. Adjusted for negative exchange rate effects of
approximately EUR470 million and changes in the scope of consolidation, the
increase comes to 4.2 percent. EBIT grew by 2.5 percent to a good EUR3.3
billion. The EBIT margin was 9.7 percent after 9.8 percent in fiscal 2013.
Adjusted EBIT, adjusted particularly for acquisition-related amortization
and special effects, rose by 3.7 percent to almost EUR3.9 billion,
corresponding to 11.3 percent of sales after 11.2 percent in the previous
year.

Net interest expense improves by more than half a billion euros 

As previously announced, the reduced net indebtedness and improved credit
and bond conditions had a significant positive impact on the Continental
Corporation's net interest expense. "Compared to 2013, our net interest
expense improved by more than half a billion euros to minus EUR265
million," said Chief Financial Officer Wolfgang Schäfer.

"This positive development is attributable in particular to the early
redemption of four bonds issued in 2010 and their partial refinancing with
considerably lower-interest bonds in 2013. In the current year, we are
anticipating net interest expense of around EUR300 million due to the
purchase price payment for Veyance Technologies. Furthermore, we are
planning on achieving free cash flow of at least EUR1.5 billion before
acquisitions," Schäfer explained.

Continental invested heavily in research and development again in 2014.
This expenditure amounted to more than EUR2.1 billion, corresponding to 6.2
percent of sales after 5.6 percent in the previous year. In addition,
EUR2.0 billion or 5.9 percent of sales was invested in property, plant and
equipment, and software. The capital expenditure ratio is again expected to
be around 6 percent in the current fiscal year.

The positive business performance is also reflected in the growing number
of employees. At the end of 2014, the Continental Corporation had around
190,000 employees, a good 11,000 more than in the previous year. The
company's workforce currently totals about 200,000.

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 2014, the corporation
generated preliminary sales of approximately EUR34.5 billion with its five
divisions, Chassis & Safety, Interior, Powertrain, Tires, and ContiTech.
Continental currently employs approximately 200,000 people in 53 countries.


Contact for journalists 

Hannes Boekhoff
Vice President Media Relations
Continental AG
Phone: +49 (0) 511 938-1278
Cell: +49 (0) 170 762 73 26
E-mail: hannes.boekhoff@conti.de

Vincent Charles
Spokesman Business & Finance
Continental AG
Phone: +49 (0) 511 938-1364
Cell: +49 (0) 173 314 50 96 
E-mail: vincent.charles@conti.de

 
This press release is available in the following languages: Chinese, Czech,
Dutch, English, French, German, Hungarian, Japanese, Korean, Portuguese
(Brazil), Portuguese (Portugal), Romanian, Russian, Slovakian, Spanish

Press portal: www.continental-presse.de
Financial reports: www.continental-ir.de
Video portal: http://videoportal.continental-corporation.com/
Media database: http://www.continental-mediacenter.com



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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:      ir@conti.de                                                 
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; Terminbörse EUREX; Luxemburg, SIX       
 
 
End of News    DGAP News-Service  
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