150 Years of Continental 2020 Annual Report Continental Group 2020 › Sales at €37.7 billion › Free cash flow at €879 million › Equity ratio at 31.9% Key Figures € millions 2020 2019 ∆ in % Sales 37,722.3 44,478.4 –15.2 EBITDA 3,033.8 4,977.2 –39.0 in % of sales 8.0 11.2 EBIT –718.1 –268.3 –167.6 in % of sales –1.9 –0.6 Net income attributable to the shareholders of the parent –961.9 –1,225.0 21.5 Basic earnings per share in € –4.81 –6.13 21.5 Diluted earnings per share in € –4.81 –6.13 21.5 Adjusted sales1 37,573.9 44,214.2 –15.0 Adjusted operating result (adjusted EBIT)2 1,332.7 3,225.5 –58.7 in % of adjusted sales 3.5 7.3 Free cash flow 878.7 761.7 15.4 Net indebtedness 4,139.1 4,071.7 1.7 Gearing ratio in % 32.7 25.6 Total equity 12,639.1 15,875.7 –20.4 Equity ratio in % 31.9 37.3 Number of employees as at December 313 236,386 241,458 –2.1 Dividend per share in € —4 3.00 Share price at year end5 in € 121.25 115.26 5.2 Share price at year high5 in € 126.50 157.40 Share price at year low5 in € 51.45 103.62 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. 4 Subject to the approval of the Annual Shareholders’ Meeting on April 29, 2021. 5 Price quotations of the Continental share in the Xetra system of Deutsche Börse AG. Overview of the Continental Group and 2020 Key Figures Structure of the Continental Group in 20201 Continental Group Sales: €37.7 billion; Employees: 236,386 Automotive Technologies Rubber Technologies Powertrain Technologies Sales: €15.3 billion Sales: €15.6 billion Sales: €7.0 billion Employees: 95,551 Employees: 100,327 Employees: 40,102 Autonomous Mobility Vehicle Networking Tires ContiTech and Safety and Information Sales: €7.5 billion Sales: €7.9 billion Sales: €10.2 billion Sales: €5.6 billion Sales: €7.0 billion Employees: 47,762 Employees: 47,789 Employees: 56,864 Employees: 43,463 Employees: 40,102 Advanced Driver Commercial Vehicles and Commercial Vehicle Tires Air Spring Systems Electronic Controls Assistance Systems Services Original Equipment Conveying Solutions Electrification Hydraulic Brake Systems Connected Car Passenger and Light Industrial Fluid Solutions Technology Networking Truck Tires (PLT) Passive Safety and Mobile Fluid Systems Sensing and Actuation Sensorics Human Machine Replacement APAC PLT Interface Power Transmission Vehicle Dynamics Replacement EMEA PLT Group Replacement Surface Solutions The Americas PLT Vibration Control Two-Wheel Tires 1 The structure of the Continental Group as of January 1, 2021, can be found in the Structure of the Continental Group section. Key figures for the group sectors Automotive Technologies Rubber Technologies Powertrain Technologies € millions 2020 2019 in % 2020 2019 in % 2020 2019 in % Sales 15,316.9 18,904.7 –19.0 15,639.5 18,012.9 –13.2 6,967.7 7,802.3 –10.7 EBITDA 498.3 1,727.7 –71.2 2,493.6 3,168.2 –21.3 122.5 192.5 –36.4 in % of sales 3.3 9.1 15.9 17.6 1.8 2.5 EBIT –1,440.6 –1,445.6 0.3 1,266.4 1,957.5 –35.3 –450.8 –662.1 31.9 in % of sales –9.4 –7.6 8.1 10.9 –6.5 –8.5 Adjusted sales1 15,303.1 18,648.3 –17.9 15,504.9 18,005.1 –13.9 6,967.7 7,802.3 –10.7 Adjusted operating result (adjusted EBIT)2 –280.2 1,115.3 –125.1 1,756.3 2,160.8 –18.7 –55.6 57.0 –197.5 in % of adjusted sales –1.8 6.0 11.3 12.0 –0.8 0.7 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. Find out more in our online magazine: mag.continental.com Contents C2 41 To Our Shareholders Management Report Key Figures for the Continental Group C2 Glossary of Financial Terms 42 Overview of the Continental Group Corporate Profile 44 and Key Figures C3 Structure of the Continental Group 44 Chairman’s Letter 4 Strategy of the Continental Group 47 Corporate Management 49 Members of the Executive Board 6 Research and Development 52 Sustainability and Combined Non-Financial Continental Shares and Bonds 8 Statement 54 Information on Reporting 54 Corporate Governance 12 Sustainability Management 54 D evelopment of Material Sustainability Topics 55 Report of the Supervisory Board 12 I ndependent Auditor’s Report 60 Corporate Governance Statement Pursuant to Section 289f of the German Commercial Code (HGB) 16 Economic Report 62 Compliance 22 Remuneration Report 23 General Conditions 62 Macroeconomic Development 62 Development of Key Customer Sectors and Sales Regions 62 Development of Raw Materials Markets 64 Earnings, Financial and Net Assets Position 65 Earnings Position 66 Financial Position 74 Net Assets Position 76 Automotive Technologies 80 Development of the Autonomous Mobility and Safety Business Area 81 Development of the Vehicle Networking and Information Business Area 83 Rubber Technologies 85 Development of the Tires Business Area 86 Development of the ContiTech Business Area 88 Powertrain Technologies 90 Development of the Powertrain Business Area 91 115 Consolidated Financial Statements Continental AG – Short Version in Accordance Statement of the Executive Board 116 with HGB 93 Independent Auditor’s Report 117 Other Information 96 Consolidated Statement of Income 123 Dependent Company Report 96 Additional Disclosures and Notes Pursuant Consolidated Statement of Comprehensive 124 to Section 289a and Section 315a HGB 96 Income Remuneration of the Executive Board 97 Corporate Governance Declaration Pursuant Consolidated Statement of Financial Position 125 to Section 289f HGB 98 Consolidated Statement of Cash Flows 127 Report on Risks and Opportunities 99 Consolidated Statement of Changes in Equity 128 Risk and Opportunity Management and Notes to the Consolidated Financial Statements 129 Internal Control System 99 Material Risks 101 Segment Reporting 129 Financial Risks 101 General Information and Risks Related to the Markets in Which Accounting Principles 137 Continental Operates 102 New Accounting Pronouncements 149 Risks Related to Continental’s Business Operations 104 Companies Consolidated and Information Legal and Environmental Risks 106 on Subsidiaries and Investments 152 Material Opportunities 107 Acquisition and Disposal of Companies Statement on Overall Risk and and Business Operations 153 Opportunities Situation 109 Notes to the Consolidated Statement of Income 154 Notes to the Consolidated Statement Report on Expected Developments 110 of Financial Position 163 Other Disclosures 209 Future General Conditions 110 Forecast of Macroeconomic Development 110 Forecast for Key Customer Sectors and Sales Regions 111 Outlook for the Continental Group 112 216 Further Information Responsibility Statement by the Company’s Legal Representatives 217 Members of the Executive Board and Their Directorships 218 Members of the Supervisory Board and 219 Their Directorships Ten-Year Review – Continental Group 221 Financial Calendar 222 Publication Details 222 4 Continental AG 2020 Annual Report To Our Shareholders Chairman’s Letter Chairman’s Letter Dear shareholders, I am writing this letter to you at the beginning of 2021, our anniversary year. 150 years of Continental: through the years, the company has enjoyed many highs and navigated through numerous lows. We are now once again experiencing a fundamental turning point for the industry, and the start of a new era. At the end of 2020, my predecessor, Dr. Elmar Degenhart, stepped down from his position for health reasons. It is indeed a great honor for me to succeed him in this role. Following the global financial crisis in 2009, Elmar Degenhart achieved an unprecedented increase in value for Continental. He guided us back into the DAX 30 and spent over 10 years laying the key foundations for our long-term viability and value creation. Now more than ever, our shared values provide an outstanding basis upon which the global Continental team and I are building. For this, we all owe him our gratitude. The current phase in our transformation is a very demanding one. It requires that we act decisively and with deter- mination. We will overcome the three major challenges facing us in a focused and pragmatic manner. The first challenge is the fundamental technological transformation over the medium to long term, the likes of which we have never experienced in our industries. Digitalization, software and electric drive systems are at the heart of this transformation. All three offer us enormous opportunities that we will seize systematically. As early as 2018, we had already started to transform our business and our structure. The second challenge is the steep decline in vehicle production, which has been at an extremely low level since 2018. Last year, just 75 million or so passenger cars and light commercial vehicles rolled off our production lines. This is a far cry from the 100 million vehicles that we anticipated for 2020 prior to the crisis. We do not expect to return to pre-crisis levels until 2025 at the earliest. And the third challenge is the coronavirus pandemic, which suddenly made the situation we were in even worse. But our global team responded to the pandemic quickly and flexibly. More than 93,000 employees started work- ing from home, and in Germany around 32,000 employees took up short-time work. Wherever necessary, the team made sacrifices and worked to reduce costs, and for this we would like to thank everyone sincerely.
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