Continental Ag · XETR:CON
Continental — H1 2020 Earnings Presentation
35 slides from Continental's earnings presentation, Aug 5, 2020
Slide 1: H1 2020 Results
H1 2020 Results Hanover – August 5, 2020 Ticker: CON ADR-Ticker: CTTAY http://www.continental-ir.com Wolfgang Schaefer – CFO
Slide 2: Agenda
Agenda Current Market Assumptions 3 Group Highlights 4 Automotive Technologies 9 Rubber Technologies 11 Powertrain Technologies 13 Cash Flow and Liquidity 14 Summary 16 Back-up and Fact Sheets 2019 – H1 2020 20 H1 2020 Results – August 5, 2020 © Investor Relations Continental AG 2
Slide 3: Current Market Assumptions
1 | Current Market Assumptions Negative Q2 Volume Development With High Uncertainty Persisting in Q3 Vehicle Production Replacement Tires Passenger Cars Commercial Passenger Cars Commercial & Light Trucks Vehicles & Light Trucks Vehicles Q2 2020 Q3e 2020 Q2 2020 Q3e 2020 Q2 2020 Q3e 2020 Q2 2020 Q3e
Slide 4: Regional Production vs. Sales Growth by Group Sectors in Q2 2020
2 | Group Highlights Comparison of Regional Production vs. Sales Growth by Group Sectors in Q2 2020 Europe1 North America1 China1 Worldwide2 ∆ Y-o-Y in % ∆ Y-o-Y in % ∆ Y-o-Y in % ∆ Y-o-Y in % 20 20 20 20 10 10 10 10 0 0 0 0 -10 -10 -10 -10 -20 -20 -20 -20 -30 -30 -30 -30 -40 -40 -40 -40 -50 -50 -50
Slide 5: Our COVID-19 Measures – H1 Update
2 | Group Highlights Our COVID-19 Measures – H1 Update Workforce Management (number of employees) Cost Management › Fixed costs reduced by >€400 mn / >10% versus prior year Q2 › Labor cost agility and voluntary salary reductions › Tight expense management in all categories: production, R&D, marketin
Slide 6: Update on Current Structural Program with More Measures in Preparation
2 | Group Highlights Update on Current Structural Program with More Measures in Preparation Performance and cost management Footprint Portfolio Additional measures Labor force adaption Y-o-Y Additional closures approved Ramp down of analog › Vehicle production not expected to reach instrumenta
Slide 7: Most Important KPIs for H1 2020
2 | Group Highlights Most Important KPIs for H1 2020 H1 2019 H1 2020 Delta Comments Sales €22.3 bn €16.5 bn -25.9% Organic growth -25.7%; FX -€172 mn Adjusted EBIT1 €1,749 mn -€202 mn -€1,951 mn Adjusted EBIT1 margin 7.8% -1.2% -900 bps PPA2 -€91 mn -€94 mn Special effects -€80 mn -€98 mn Carve-out
Slide 8: Q2 2020 – Sales and Earnings Performance
2 | Group Highlights Q2 2020 – Sales and Earnings Performance Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -39.8% › Sales drop sharply driven by OE business 11,264 (-47% Y-o-Y) with lower impact in non-OE (-23% Y-o-Y) › Outperformance 4,841 › Automotive Technologies: ~ -100 bps -45.6% 6,620 865 › Powert
Slide 9: Q2 2020 – Autonomous Mobility and Safety
3 | Automotive Technologies Q2 2020 – Autonomous Mobility and Safety Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -46.3% › Europe and North America impacted heavily, 2,384 while China recorded positive growth › Negative volume development across all business units › Outperformance: ~ -100 bps Adjusted E
Slide 10: Q2 2020 – Vehicle Networking and Information
3 | Automotive Technologies Q2 2020 – Vehicle Networking and Information Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -44.8% › Europe and North America were hit hardest but 2,475 less impact in Asia › Negative volume development across all business units › Outperformance: ~ 0 bps Adjusted EBIT1 › Operat
Slide 11: Q2 2020 – Tires
4 | Rubber Technologies Q2 2020 – Tires Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -31.8% › Volume: -32.1% 2,871 › Negative impacts in all regions except China › Replacement volumes in Europe and North America continuously improving › Price/mix: +0.3% 1,912 14.3% 410 › Negative OE pricing more than of
Slide 12: Q2 2020 – ContiTech
4 | Rubber Technologies Q2 2020 – ContiTech Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -35.7% › OE business declined organically by 50%, while 1,677 industrial and aftermarket down organically by only 21% › €18 mn consolidation effect from Merlett acquisition 1,064 Adjusted EBIT1 › Operating leverag
Slide 13: Q2 2020 – Powertrain
5 | Powertrain Technologies Q2 2020 – Powertrain Sales (€ mn) Adjusted EBIT1 (€ mn) Sales -40.8% › Decline mainly driven by ECUs, hydraulic and 1,961 mechanical components › Emission control systems less affected by decline in demand › Stable sales in Electrification Technology4; sales of €54 mn vs.
Slide 14: Free Cash Flow Negatively Impacted by Temporary Working Capital Effects
6 | Cash Flow and Liquidity Free Cash Flow Negatively Impacted by Temporary Working Capital Effects Cash Flow Q2 2020 (€ mn) Operating Cash Flow Operating Investing Free Cash Flow Financing › Impacted by lower EBIT as well as negative Carve-out effects Acquisitions before acquisitions excluding carv
Slide 15: Financial Position Remains Solid
6 | Cash Flow and Liquidity Financial Position Remains Solid Liquidity and Maturities (€ mn) Credit Lines Liquidity Maturities1 › Unutilized committed credit lines consisting of: 10,144 › 2019 syndicated loan facility of €4 bn with expiring in December 2024 › 2020 syndicated loan facility of €3 bn w
Slide 16: Summary
7 | Summary Review Q2 2020 Our Priorities › Group Y-o-Y organic growth of -39.8% › Health and safety of our employees › Outperformance achieved in all major regions › Sustain solid financial position › Group operating leverage in Q2: 32% (Q1: 38%) › Strict cost reduction discipline to be maintained
Slide 17: j yee i)
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Slide 18: Disclaimer
Disclaimer › This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the Analyst and Investor Call on August 5, 2020, and the subsequent analyst and investor meetings. It has not been independently verified. It does not constitute an offer, invitation or recom
Slide 19: Back-up
Back-up H1 2020 Results – August 5, 2020 © Investor Relations Continental AG 19
Slide 20: Regional Production vs. Sales Growth by Group Sectors in H1 2020
Back-up Comparison of Regional Production vs. Sales Growth by Group Sectors in H1 2020 Europe1 North America1 China1 Worldwide2 ∆ Y-o-Y in % ∆ Y-o-Y in % ∆ Y-o-Y in % ∆ Y-o-Y in % 10 10 10 10 5 5 5 5 0 0 0 0 -5 -5 -5 -5 -10 -10 -10 -10 -15 -15 -15 -15 -20 -20 -20 -20 -25 -25 -25 -25 -30 -30 -30 -30
Slide 21: Key Historical Credit Metrics
Back-up Key Historical Credit Metrics (€ mn)1 2016 2017 2018 2019 5 LTM Statement of Cash Flows Adjusted EBITDA 6,125 6,701 6,190 5,837 3,915 Reported EBITDA 6,057 6,679 6,236 4,977 3,099 Net cash interest paid -112 -105 -91 -83 -124 Tax paid -1,047 -1,122 -848 -866 -766 Change in net working capita
Slide 22: Capex, Depreciation and Earnings per Share – Breakdown for H1 2020
Back-up Capex, Depreciation and Earnings per Share – Breakdown for H1 2020 Capex, Depreciation and PPA1 (€ mn) EPS excl. PPA1,2 (€) 3 1,426 3 3 1,263 1,351 1,174 3 989 923 5.2% 6.4% 85 91 5.6% 94 - 1.90 - 2.24 0.34 2018 2019 2020 - 1 Reported EPS PPA per EPS excl. 2 share after tax PPA1,2 ■ Capex (P
Slide 23: Recent Bond Placements
Back-up Recent Bond Placements Conti-Gummi Finance B.V., Conti-Gummi Finance B.V., Continental AG Issuer Netherlands5 Netherlands5 Issue Senior Notes Principal amount €750 mn €625 mn €750 mn Offering price 99.559% 99.589% 98.791% Rating Baa2 (Moody’s) Baa2 (Moody’s) Baa2 (Moody’s) at issue date BBB
Slide 24: Continental’s Credit Rating
Back-up Continental’s Credit Rating S&P, Fitch / Moody’s BBB+ / Baa1 Investment grade BBB / Baa2 BBB- / Baa3 BB+ / Ba1 Non-investment BB / Ba2 grade Before BB- / Ba3 Siemens VDO B+ / B1 B / B2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Standard & Poor’s1 Moody’s2 Fitc
Slide 25: Fact Sheets 2019 – H1 2020
Fact Sheets 2019 – H1 2020 H1 2020 Results – August 5, 2020 © Investor Relations Continental AG 25
Slide 26: Sales and Adjusted EBIT by Quarter
Fact Sheets Sales and Adjusted EBIT1 by Quarter Sales Adjusted EBIT1 2019 2020 2019 2020 Sales (€ mn) Adj. EBIT¹ (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Autonomous Mobility and Safety 2,359.0 2,384.0 2,289.8 2,348.8 9,381.6 2,060.3 1,256.2 Autonomous Mobility and S
Slide 27: EBITDA and EBIT by Quarter
Fact Sheets EBITDA and EBIT by Quarter EBITDA EBIT 2019 2020 2019 2020 (€ mn) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Autonomous Mobility and Safety 270.0 292.7 260.4 322.2 1,145.3 151.3 -61.6 147.2 164.4 -590.9 159.0 -120.3 11.8 -193.9 Vehicle Networking and Information
Slide 28: Consolidated Statement of Income
Fact Sheets Consolidated Statement of Income 2020 2019 2020 2019 (€ mn) 1-6 1-6 Q2 Q2 Sales 16,532.4 22,310.7 6,619.7 11,264.0 Cost of sales -13,261.9 -16,878.1 -5,609.8 -8,523.5 Gross margin on sales 3,270.5 5,432.6 1,009.9 2,740.5 Research and development expenses -2,133.0 -2,232.9 -989.4 -1,150.0
Slide 29: Consolidated Statement of Financial Position – Assets
Fact Sheets Consolidated Statement of Financial Position – Assets Assets (€ mn) June 30, 2020 December 31, 2019 June 30, 2019 Goodwill 5,073.4 5,113.5 7,351.5 Other intangible assets 1,651.4 1,691.8 1,700.7 Property, plant and equipment 14,101.6 14,932.7 14,513.1 Investment property 11.4 11.7 11.8 I
Slide 30: Consolidated Statement of Financial Position – Total Equity and Liabilities
Fact Sheets Consolidated Statement of Financial Position – Total Equity and Liabilities Equity and liabilities (€ mn) June 30, 2020 December 31, 2019 June 30, 2019 Subscribed capital 512.0 512.0 512.0 Capital reserves 4,155.6 4,155.6 4,155.6 Retained earnings 13,073.3 13,522.1 15,807.2 Other compreh
Slide 31: Consolidated Statement of Cash Flows
Fact Sheets Consolidated Statement of Cash Flows January 1 to June 30 Second Quarter (€ mn) 2020 2019 2020 2019 Net income -445.1 1,082.3 -737.5 494.9 Income tax expense -10.7 396.3 -144.8 213.9 Financial result 63.0 98.0 53.2 44.5 EBIT -392.8 1,576.6 -829.1 753.3 Interest paid -70.9 -53.4 -49.7 -24
Slide 32: Reported and Adjusted H1 2020 Results (€ mn)
Fact Sheets Reported and Adjusted H1 2020 Results (€ mn) Autonomous Mobility Vehicle Networking (€ mn) Tires ContiTech Powertrain Cons. / Corr. Group and Safety and Information 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 Sales 4,743.0 3,316.5 4,869.9 3,449.6 5,701.5 4,395.7
Slide 33: References
References Useful Links Continental Investor Relations website www.continental-ir.com Annual and interim reports www.continental-corporation.com/en/investors/reports Fact Book / Investor Presentation https://www.continental.com/resource/blob/216182/efcf10cdc6ebd9fbc952e257cd2dcfd7/investor- presenta
Slide 34: Financial Calendar
Continental Financial Calendar 2020 Annual Financial Press Conference March 5, 2020 Q1 Financial Report May 7, 2020 Annual Shareholders’ Meeting (virtual) July 14, 2020 Half-Year Financial Report August 5, 2020 Nine-Month Financial Report November 11, 2020 2021 Annual Financial Press Conference Marc
Slide 35: Contact
Contact Equity and Debt Markets Relations Vahrenwalder Str. 9 e-mail: [email protected] 30165 Hanover Fax: +49 511 938-1080 Germany www.continental-ir.com Bernard Wang Phone: +49 511 938-1068 Michael Saemann Phone: +49 511 938-1307 Head of IR e-mail: [email protected] Analysts, Institutional Investors