Continental AG: Driving the Global Transformation of Mobility and Technology

Continental AG stands as a global powerhouse in the technology sector, serving as a leading tier-one supplier to the automotive industry while maintaining a dominant presence in the global tire and industrial rubber markets. With a legacy spanning over a century and a half, the group has evolved from a local rubber manufacturer into a multi-sector technology leader that bridges the gap between mechanical engineering and digital innovation.

Quick Facts / Company Snapshot

• Full Company Name: Continental Aktiengesellschaft
• Headquarters: Hanover, Germany
• Total Consolidated Sales (2024): €39.7 billion
• Adjusted EBIT Margin: 6.8%
• Total Number of Employees: 190,159
• Global Presence: 518 locations in 55 countries and markets
• Equity Ratio: 40.0%
• Research & Development Locations: 91 centers worldwide
• Primary Customer Group: Automotive Industry (62% of sales)
• Core Business Sectors: Automotive, Tires, ContiTech, and Contract Manufacturing
• Free Cash Flow (2024): €1.114 billion
• Net Income (Attributable to Shareholders): €1.168 billion
• Dividend Proposal for 2024: €2.50 per share
• Gearing Ratio: 25.1%
• Total Assets: €36.966 billion

Company Overview

Continental Aktiengesellschaft (Continental AG) functions as the parent company of the Continental Group, managing a complex ecosystem of 477 companies, including non-controlled entities. The group’s operational philosophy is centered on the vision of “Creating Value for a Better Tomorrow,” focusing on safe, intelligent, and sustainable solutions for mobility and industrial applications.

The organizational structure is designed to empower individual group sectors with maximum entrepreneurial freedom while maintaining the strategic and financial oversight of a global holding. This approach allows the group to navigate the rapid transformation of the automotive and industrial sectors, particularly the shift toward electric mobility, autonomous driving, and software-defined vehicles.

Key Strategic Highlights for 2024:

• The group achieved its annual financial targets despite a weak macroeconomic environment in Europe and a global downturn in automotive production.
• A major strategic realignment was initiated, including the planned spin-off of the Automotive and Contract Manufacturing sectors by the end of 2025.
• Profitability improved across key sectors, with the adjusted EBIT margin rising from 6.1% to 6.8% year-on-year.

Business Segments and Revenue Breakup %

The operations of the Continental Group are divided into four distinct group sectors, each targeting specific market segments and customer groups.

Automotive (49% of Group Sales)

The Automotive sector is the largest contributor to the group’s top line, generating €19.4 billion in sales during 2024. This sector specializes in safety, braking, chassis, motion, and motion-control systems. It is the engine of innovation for vehicle connectivity and software solutions.

• Operational Scope: Includes architecture and network solutions, autonomous mobility, safety and motion, and user experience technologies.
• Performance: The sector achieved an adjusted EBIT margin of 2.3% in 2024, showing improvement despite the challenges in global automotive production.

Tires (35% of Group Sales)

The Tires sector is the primary profit driver for the group, contributing €13.9 billion in sales. It focuses on innovative tire solutions for passenger cars, trucks, buses, and two-wheelers.

• Operational Scope: Divided into Original Equipment, Specialty Tires, and replacement business regions (APAC, EMEA, and The Americas).
• Performance: Tires maintained a leading market position with an adjusted EBIT margin of 13.7%, driven by high-performance and sustainable premium products.

ContiTech (16% of Group Sales)

ContiTech focuses on materials expertise, developing rubber, metal, and textile solutions for both industrial and automotive applications. It generated €6.4 billion in sales.

• Operational Scope: Products include hoses, conveyor belts, air springs, and drive belts for industries such as energy, agriculture, and construction.
• Performance: The sector achieved an adjusted EBIT margin of 6.2%, meeting its annual targets despite a weak industrial environment.

Contract Manufacturing (approx. 1% of Group Sales)

This segment handles production for the Schaeffler Group/Vitesco Technologies. It is being phased out as part of the group’s strategic focus, contributing €0.2 billion in sales for 2024.

History and Evolution

Continental has a long-standing history that began in Hanover, Germany, in 1871. Originally founded as the “Continental-Caoutchouc- und Gutta-Percha Compagnie,” the company initially specialized in soft rubber products and rubberized fabrics. Over the decades, it pioneered various tire technologies, including the first pneumatic tires for bicycles and automobiles.

In the mid-2000s, the company underwent a series of strategic acquisitions that transformed it into a global tier-one automotive supplier. This evolution shifted the focus from pure rubber production to sophisticated electronic systems, safety technologies, and software. Today, Continental is in the midst of its next major transformation: realigning its structure to become more flexible and independent.

Significant Milestones in 2024:

• Approval for the spin-off of Automotive and Contract Manufacturing as a separate, listed European company (SE).
• Successful integration of 15 business areas under the new sector-specific leadership structures.
• Ongoing reduction of contract manufacturing volumes to promote operational separation from Vitesco Technologies.

Products and Services with Revenue Breakup %

The product portfolio is highly diversified, catering to both industrial giants and individual consumers.

Automotive Solutions

• Safety and Motion: Brake systems, electronic stability control, and motion sensors.
• Autonomous Mobility: Camera systems, radar, and lidar technologies for assisted driving.
• User Experience: Display technologies, head-up displays, and interior camera solutions.
• Architecture and Networking: High-performance computers and vehicle electronics.

Tire Solutions

• Replacement Business (76% of Tires Sales): Providing high-quality tires for the aftermarket across all vehicle categories.
• Original Equipment (24% of Tires Sales): Direct supply to vehicle manufacturers for new car production.

Industrial and Surface Solutions (ContiTech)

• Industrial Markets (56% of ContiTech Sales): Conveyor belts for mining and energy, and hoses for agriculture.
• Automotive Original Equipment (44% of ContiTech Sales): Specialized rubber and metal parts for vehicle manufacturing.

Brand Portfolio

Continental manages a powerful portfolio of brands that command premium positions in their respective markets. While “Continental” is the flagship brand, the group also operates through several specialized entities and product lines.

• Continental: The primary premium brand for tires and automotive technologies globally.
• Specialty Brands: These include various sub-brands in the tire sector and industrial brands under the ContiTech umbrella.
• Tire Outlets: The group operates 848 company-owned tire outlets and partners with approximately 5,600 franchises.

Geographical Presence and Region-wise Revenue %

Continental maintains a vast global footprint, ensuring proximity to major automotive and industrial hubs.

• Global Footprint: 518 locations for production, research and development, and administration across 55 countries.
• Europe: Remains the core market, though it faced a weak macroeconomic environment in 2024. Germany specifically saw a GDP decline of 0.2%.
• The Americas: A major growth and production region, particularly for the Tires and ContiTech sectors.
• Asia-Pacific (APAC): A critical region for both production and sales, with a strong focus on the Chinese market.

Distribution of the Workforce:

• Total Employees: 190,159 as of December 31, 2024.
• Automotive: 92,581 employees.
• Tires: 57,060 employees.
• ContiTech: 39,211 employees.

Financial Performance Analysis

The financial results for 2024 reflect a resilient company navigating a transitional phase.

• Group Sales: Totaled €39,719 million, a 4.1% decrease from 2023 (€41,421 million).
• Organic Sales Growth: Sales decreased by 2.6% when excluding changes in consolidation and exchange-rate effects.
• EBIT (Earnings Before Interest and Tax): Rose significantly to €2,287 million from €1,854 million in the previous year, a 23.4% increase.
• Adjusted EBIT: Increased by 6.6% to €2,694 million, representing a margin of 6.8%.

Historical Comparison Trends:

• Net Income: Increased slightly to €1,168 million (2024) from €1,156 million (2023).
• Earnings Per Share (EPS): Rose to €5.84 from €5.78.

Profit and Loss Analysis

The group’s ability to maintain and grow margins in a declining sales environment highlights its focus on efficiency and cost management.

• Gross Margin Improvement: Despite lower sales, the group improved its adjusted EBIT margin by 70 basis points (from 6.1% to 6.8%).
• Automotive Margin: Improved to 2.3% from 2.0% in 2023.
• Tires Margin: Remained robust at 13.7% (up from 13.5% in 2023).
• Expense Management: The group faced higher wage and salary costs of approximately €0.5 billion, which was partially offset by price adjustments and efficiency measures.

Segment Performance (Adjusted EBIT):

• Automotive: €454 million.
• Tires: €1,902 million.
• ContiTech: €393 million.

Balance Sheet Analysis

The balance sheet shows a strong equity position and a reduction in debt.

• Total Assets: €36,966 million, down from €37,753 million in 2023.
• Total Equity: Increased to €14,798 million, resulting in a solid equity ratio of 40.0%.
• Net Indebtedness: Decreased by €326 million to €3,712 million.
• Gearing Ratio: Improved to 25.1% from 28.6% in the prior year.

Asset Composition:

• Non-current Assets: €19,016 million (includes €3,165 million in goodwill and €11,798 million in property, plant, and equipment).
• Current Assets: €17,950 million (includes €6,113 million in inventories and €2,966 million in cash).

Cash Flow Analysis

Continental maintained healthy cash generation to fund operations and shareholder returns.

• Cash Flow from Operating Activities: €2,934 million (down from €3,328 million in 2023).
• Cash Flow from Investing Activities: -€1,821 million.
• Free Cash Flow: Stood at €1,114 million, slightly down from €1,159 million in the previous year but exceeding adjusted expectations.
• Adjusted Free Cash Flow: €1.05 billion, supported by a positive contribution from Automotive and reduction in inventories.

Management Discussion & Analysis (MD&A)

The management team, led by Nikolai Setzer, emphasized the effectiveness of the value-creation strategy in a weak macroeconomic environment.

• Market Environment: 2024 was characterized by geopolitical tensions, high energy prices, and rising interest rates. Global GDP grew by 3.2%, but Germany saw a contraction.
• Strategic Realignment: Management highlighted the “implementation phase” of their strategic plan, focusing on strengthening the independence of each group sector.
• Future Outlook: Despite market difficulties, the company aims to continue its upward trajectory in 2025 by leveraging its leading positions in premium tires and automotive software.

Board of Directors and Leadership Team

The Executive Board of Continental AG is responsible for managing the company.

• Nikolai Setzer: Chairman of the Executive Board; responsible for Group Strategy, Communications, Purchasing, IT, and Contract Manufacturing.
• Olaf Schick: Group Finance and Controlling, Compliance, Internal Audit, and Law.
• Dr. Ariane Reinhart: Group Human Relations, Director of Labor Relations, and Group Sustainability.
• Philipp von Hirschheydt: Head of Automotive Group Sector.
• Christian Kötz: Head of Tires Group Sector.
• Philip Nelles: Head of ContiTech Group Sector.

Physical Properties

Continental operates a massive infrastructure to support its global supply chain.

• Manufacturing and R&D: 518 locations worldwide.
• Research & Development: 91 specialized R&D centers.
• Property, Plant, and Equipment: Valued at €11,798 million on the balance sheet.
• Tire Outlets: Over 6,400 combined company-owned and franchised locations.

Segment-wise Performance YoY

Automotive

• Sales Trend: -4.3% YoY.
• Adjusted EBIT Trend: +13.2% YoY (from €401 million to €454 million).
• Analysis: Profitability increased despite falling sales, indicating strong cost control and better product pricing.

Tires

• Sales Trend: -0.7% YoY.
• Adjusted EBIT Trend: +1.3% YoY (from €1,877 million to €1,902 million).
• Analysis: The sector remained the bedrock of group profits, maintaining high margins even in a flat market.

ContiTech

• Sales Trend: -6.7% YoY.
• Adjusted EBIT Trend: -13.6% YoY (from €455 million to €393 million).
• Analysis: Impacted by a weak industrial environment, particularly in Europe.

Shareholding Pattern

Continental AG is a publicly listed company on several German stock exchanges.

• Share Capital: €512,015,316.48, divided into 200,005,983 no-par-value shares.
• Listing: Frankfurt (Prime Standard), Hamburg, Hanover, and Stuttgart.
• Ownership: The shares are widely held by institutional and public investors. The Schaeffler Group has historically held a significant stake in the company.

Investments and Capital Expenditure Plans

The group continues to invest heavily in its future competitiveness.

• R&D Spending: Continental generally invests approximately 7% of sales in research and development annually.
• Capital Expenditure: Additions to property, plant, and equipment, and software totaled billions across the segments to modernize production.
• Sustainable Transition: Significant R&D is directed toward sustainable premium tires and software-defined vehicle architectures.

Future Strategy

The group’s future is defined by three strategic pillars:

1. Strengthening Operational Performance: Improving efficiency across all manufacturing and administrative processes.
2. Differentiation of the Portfolio: Focusing on high-growth and high-margin segments like autonomous driving and premium tires.
3. Consistent Exploitation of Opportunities: Navigating the spin-off of Automotive to create two distinct, high-value entities.

Competitive Landscape

Continental operates in highly competitive global markets.

• Automotive Peers: Bosch, Denso, and Magna International.
• Tire Peers: Michelin, Bridgestone, and Goodyear.
• Industrial Peers: Companies in the industrial rubber and materials sector.

Key Strengths

• Leading Market Positions: Ranked among the top global suppliers for tires and automotive electronics.
• Diverse Revenue Streams: Balanced portfolio between automotive manufacturing and the more stable tire replacement market.
• Technological Expertise: Strong R&D foundation in software and advanced materials.
• Financial Stability: High equity ratio (40%) and improving gearing ratio.

Key Challenges and Risks

• Economic Volatility: Vulnerability to global economic downturns and fluctuations in automotive production volumes.
• Geopolitical Tensions: Impact on supply chains and energy prices, particularly in Europe.
• Raw Material Costs: Sensitivity to prices of natural rubber, crude oil, and metals (steel, copper, aluminum).
• Transformation Risks: Challenges associated with the shift to electric mobility and the complex spin-off of major group sectors.

Conclusion and Strategic Outlook

Continental AG has demonstrated resilience in 2024, successfully meeting its financial targets while setting the stage for a historic organizational split. By decoupling its Automotive sector, the group aims to unlock new value for shareholders and allow its Tires and ContiTech sectors to focus on their respective industrial and consumer strengths. With a solid balance sheet and a clear roadmap for 2025, Continental is positioned to remain a central player in the future of global mobility.

FAQ Section:

1. What were Continental AG’s total sales in 2024? The Continental Group generated €39.7 billion in sales in 2024.
2. What are the main business sectors of Continental? The group is divided into Automotive, Tires, ContiTech, and Contract Manufacturing.
3. What is the planned spin-off for 2025? Continental plans to spin off its Automotive and Contract Manufacturing sectors into an independent, listed European company.
4. How many people does Continental employ globally? As of the end of 2024, Continental employed 190,159 people.
5. Where is Continental AG headquartered? The company is headquartered in Hanover, Germany.
6. What is the current dividend proposal? The Executive Board has proposed a dividend of €2.50 per share for the 2024 fiscal year.

Content is based on publicly available corporate filings, regulatory disclosures, annual reports, 10-K filings, Investor Relations materials, and direct mail communication with the company.