Continental AG — Earnings Release 2016

Oct 17, 2016

News Details

Ad-hoc | 17 October 2016 18:07

Continental AG: Continental Changes Outlook for Fiscal 2016

Continental AG / Key word(s): Profit Warning

17.10.2016 18:07

Disclosure of an inside information according to Article 17 MAR,
transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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EBIT of the Automotive Group is expected to be significantly lower than the
previous year's level.

• Potential expenditure for warranties and pending antitrust proceedings
  and

• the aftermath of three earthquakes in Japan as well as high R&D
  advances

will have a negative impact on Automotive Group's reported and adjusted
EBIT for fiscal 2016 of around EUR480 million and on the corporation's
outlook, which was last changed on August 3, 2016.

Hanover - Over the past few days, several isolated circumstances have
resulted in the following situation:

The Chassis & Safety and Interior divisions are anticipating a negative
impact of around EUR390 million due to warranties for products, the
majority of which were supplied between 2004 and 2010, and due to
potential expenditures for pending antitrust proceedings.

The situation of one of our microcontroller suppliers has become even worse
due to the latest earthquake on August 31, 2016, in the Kumamoto region of
Japan. As a result, the Interior division is anticipating a loss in sales
in the current year amounting to at least EUR100 million (previously
expected: EUR50 million). EBIT will be impacted by around EUR50 million due
to special cargos, product adjustments and increased manufacturing costs.

R&D advances which are higher than expected further impacted the Interior
and Powertrain divisions by roughly an additional EUR60 million.
Consequently, the adjusted EBIT margin of the Powertrain division in 2016
will be below the previous year's level of 5.7 percent.

These burdens can only be partially absorbed. In aggregate, these
circumstances result in a negative effect on the Automotive Group's
reported and adjusted EBIT of around EUR480 million.

Effects on the outlook for the corporation, which was previously amended on
August 3, are as follows:

• Despite the situation in Japan, the sales forecast for the corporation
  is still confirmed at around EUR41 billion before exchange-rate effects

• The adjusted EBIT margin for the corporation will be over 10.5 percent
  in the current year
  (previously over 11 percent)

• The sales forecast for the Automotive Group is confirmed at around
  EUR25 billion before exchange-rate effects

• The outlook for the adjusted EBIT margin of the Automotive Group has
  been lowered to over 6.5 percent (previously over 8.5 percent)

• The outlook for the Rubber Group (sales over EUR16 billion before
  exchange-rate effects and adjusted EBIT margin over 17 percent) is
  confirmed

• All remaining elements of the outlook (negative special effects
  amounting to around EUR100 million, negative net interest result better
  than EUR250 million, corporation tax rate below 30%, capital
  expenditure ratio before financial investments at around 6% of sales,
  and free cash flow before acquisitions of at least EUR2 billion) are
  confirmed.

17.10.2016 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Archive at www.dgap.de

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Language: English
Company: Continental AG
Vahrenwalder Straße 9
30165 Hannover
Germany
Phone: +49 (0)511 938-1068
Fax: +49 (0)511 938-1080
E-mail: ir@conti.de
Internet: www.conti.de
ISIN: DE0005439004
WKN: 543900
Indices: DAX
Listed: Regulated Market in Frankfurt (Prime Standard), Hamburg,
Hanover, Stuttgart; Regulated Unofficial Market in Berlin,
Dusseldorf, Munich, Tradegate Exchange; Luxemburg, SIX

End of Announcement DGAP News-Service

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