Continental AG: Revision of Guidance for Fiscal 2018

Hanover, August 22, 2018. Lowered sales expectations, cost increases and warranty claims are decreasing the adjusted operating result (adjusted EBIT) in the third quarter of 2018. At present, sales of about EUR11 billion and an adjusted operating result (adjusted EBIT) of more than EUR700 million are expected for the corporation for the period from July 1 to September 30, 2018.

The aforementioned factors will also impact the fourth quarter, making it necessary to revise the guidance for 2018 as follows:

• Consolidated sales this year will amount to approximately EUR46 billion before exchange-rate effects. We previously expected a figure of around EUR47 billion. We currently estimate that exchange-rate effects will negatively impact sales by about EUR1 billion in 2018. Previously the impact was estimated at more than EUR1 billion. After this revision, the adjusted operating result (adjusted EBIT) will be more than 9%. More than 10% was previously forecast.
• In the Automotive Group, we expect to achieve sales of approximately EUR28 billion before negative exchange-rate effects, instead of about EUR28.5 billion as had been previously forecast. We currently estimate that exchange-rate effects will negatively impact sales in the Automotive Group by about EUR0.5 billion in 2018. The adjusted EBIT margin for the Automotive Group will be about 7% in 2018. Previously, around 8.5% had been forecast. Warranty claims will reduce the reported and the adjusted EBIT by a total of EUR150 million.
• In the Rubber Group, we expect to achieve sales of around EUR18 billion before negative exchange-rate effects, instead of about EUR18.5 billion as was previously forecast. We estimate that exchange-rate effects will negatively impact sales in the Rubber Group by about EUR0.5 billion in 2018. The adjusted EBIT margin for the Rubber Group will be more than 13% in 2018. More than 14% was previously forecast.
• We are reducing the guidance for free cash flow before acquisitions and before the outflow for the funding of the U.S. pension plans from about EUR2 billion to around EUR1.6 billion in 2018.
• The other elements of the guidance issued on August 2, 2018, remain unchanged, namely the impact from higher raw material costs amounting to more than EUR50 million, the negative financial result of less than EUR180 million, the tax rate of approximately 25%, the negative special effects of EUR50 million, the amortization from purchase price allocations of approximately EUR180 million, and the capital expenditure ratio before financial investments of around 7%.

Furthermore, for Powertrain the figures estimated in April 2017 for 2019 sales (EUR10 billion) and EBIT (EUR850 million) will no longer be achieved. They will be updated and revised in the course of the carve out of the division.

The financial report for the first nine months of 2018 will be released on November 8, 2018.

 "Adjusted EBIT" and "EBIT" are defined in the Glossary of Financial Terms on pages 38 and 39 of the 2017 Annual Report, which is available at www.continental-ir.com.


Contact:
Person making the notification: Rolf Woller, Head of IR