Continental presents mid-term targets

Continental revealed its strategy for growth at its Capital Market Day yesterday. The company aims to enhance value creation by implementing cost reduction measures, with a goal of achieving an adjusted EBIT margin of 8 to 11 per cent within two to three years and improving within this range thereafter. Continental also refined its sales targets and now aims for €44-48 billion in the short term (2-3 years) and €51-56 billion in the medium term (3-5 years).

The company also plans to restructure parts of its business, expand dividends, and review its portfolio. The Tires group will emphasise stable earnings, exploring opportunities in sustainability, electric mobility, and digital tyre services. In the Automotive sector, Continental will focus on high-growth areas, preparing for the User Experience business segment’s organisational independence. ContiTech aims for reliable profitability, concentrating more on its industrial business to increase its share of overall sales from around 55 per cent to 80 per cent.

Increasing value creation

“Our strategy aims to increase our value creation,” states Nikolai Setzer, chief executive officer of Continental. “This will allow us to continue to develop into the mobility and material technology group for safe, smart and sustainable solutions.

“There are good reasons to invest in Continental,” Setzer adds. “We have a clear strategy to achieve our mid-term targets. We will invest specifically in those areas with value creation upside and expand our technology position wherever this gives us an edge over the competition. Our three group sectors make up a balanced and resilient portfolio, which we and our highly effective and efficient team will manage flexibly, proactively and with foresight.”

Referring to the company’s development over the past few years, Setzer added: “After a long period of success, we have more recently had to face many challenges, and our results have not always met our expectations. At the same time, however, this extremely challenging time has also made us more robust. We are therefore entering this next phase of increased value creation in a strong position.”

Growth opportunities through premium tyres

With the Tires group sector achieving an average 4.3 per cent annual sales increase over the last five years, Continental views this business as one that “stands for profitable growth and exceptional value creation,” its success lying in operational efficiency and adapting production technologies to meet market demands, with more than 80 per cent of production bundled in megafactories.

The company anticipates further growth opportunities through sustainability, electric mobility, and digitalisation. With a strong market position, Continental aims for its Tires group sector to achieve €17-18 billion in sales and an adjusted EBIT margin of 13 to 16 per cent in the medium term. It foresees growth potential in regions such as Asia-Pacific and North and South America and is banking on recovery in European replacement tyre demand, efficiency improvements, a trend towards larger and higher-performing tyres, and stringent cost control to drive sales and margins.

Source: Continental