Continental AG Business Report FY2010

Business Highlights

Financial Overview

(in million euros)
  FY2010 FY2009 Rate of
change(%)
Factors
Overall
Sales 26,046.9 20,095.7 29.6 -
EBIT 1,935.2 (1,040.4) -
Chassis & Safety
Sales 5,775.4 4,373.6 32.1 -Before changes in the scope of consolidation and exchange rate effects, sales increased by 26.7%, due to the recovery of all business units in all regions.
EBIT 569.0 (102.5) -
Powertrain
Sales 4,730.8 3,399.2 39.2 -Before changes in the scope of consolidation and exchange rate effects, sales increased by 36.2%.
EBIT (198.1) (943.2) -
Interior
Sales 5,518.1 4,362.7 26.5 -Before changes in the scope of consolidation and exchange rate effects, sales increased by 22.4%, mainly due to the recovery of the markets compared with 2009.
EBIT 197.0 (516.0) -
Passenger and Light Truck Tires
Sales 5,820.8 4,696.4 23.9 -Before changes in the scope of consolidation and exchange rate effects, sales increased by 18.2%.
EBIT 993.3 536.4 85.2
Commercial Vehicle Tires
Sales 1,427.8 1,065.6 34.0 -Before changes in the scope of consolidation and exchange rate effects, sales rose by 25.8%.
EBIT 50.1 (50.1) -
ContiTech
Sales 3,095.3 2,406.1 28.6 -Before changes in the scope of consolidation and exchange rate effects, sales rose by 26.4%. All business units but one achieved high double-digit growth rates. With a 37% jump in sales, the automotive OE sector contributed the most to business performance.
EBIT 369.6 169.4 118.1
*EBIT:Earning Before Interest and Taxation
 

Acquisitions
-Emitec GmbH of Germany, a 50:50 joint venture between Continental and GKN Driveline, has acquired the Danish company Grundfos NoNOx A/S. Grundfos NoNOx produces SCR systems for truck and bus diesel engines and its development and production facilities are located in France. Emitec develops and produces catalytic converters and particle filters for exhaust gas after-treatment systems used in passenger cars. (From a press release on September 15, 2010)

Contracts

-The Company will supply booster module called E-booster to PSA Peugeot Citroen for its e-HDi micro-hybrid systems. The US-based Maxwell Technologies will manufacture super capacitors for the system. PSA Peugeot Citroen plans to sell around one million vehicles equipped with the new micro-hybrid technology e-HDi over the next three years. (From a press release on October 13, 2010)

-ContiSportContact 3 tire with self-sealing ContiSeal technology is being factory-fitted on the new Volkswagen Passat CC. The tire, in the size of 235/40 ZR18 95Y XL, is able to immediately seal holes up to five millimeters in diameter, covering about 85% of typical flat tires. Volkswagen is currently equipping all Passat-CC models exclusively with Continental tires with the seal technology. (From a press release on June 18, 2010)

-The supply contract between Continental's Commercial Vehicle Tires Division and Volvo Group Europe has been signed. For the years 2010 to 2012, Continental will deliver its tires as original equipment for trucks from all Volvo Group Europe brands. (From a press release on April 7, 2010)

-Continental Tire the Americas, LLC will supply the original equipment truck tires for the 2011 Dodge Ram Chassis Cab pickup trucks. Chrysler Group LLC designated that all Ram 4500 and 5500 Chassis Cab trucks will be equipped with Continental's 225/70R19.5 tires. Continental HSR(R)(steer) and HDR(R)(drive) tire products were selected for the fitment. (From a press release on March 4, 2010)

Award

-The Company's Powertrain Division received the European Regional Quality Award for 2009 from Nissan. The Division was recognized for the engine control unit (ECU) in the 1.5 liter diesel engine (K9K) in the Nissan Qashqai and for the knock sensors installed in the 1.2 and 1.4 liter engines in Nissan's Micra and Note models. These components are manufactured at Continental's Foix and Boussens sites in France. (From a press release on August 4, 2010)

-NGK Insulators, Ltd. was awarded the PACE Award for its automotive Smart NOx sensor it had developed jointly with Germany-based Continental AG. The Premier Auto Suppliers Contribution to Excellence (PACE) Awards of the U.S. are given to vehicle parts manufacturers which achieved innovative technical development. NGK and Continental earned the award in recognition of the high level of fuel economy and emissions reductions the sensor can offer to diesel engine vehicles. The Smart NOx sensor is the world's first technology that can measure NOx contained in vehicle exhaust in parts-per-million level concentrations. NGK is expecting demand for this cutting-edge product will be increasing especially in Europe. (From an article in the Nikkan Jidosha Shimbun on May. 14, 2010)

-The Company earned the Automotive News PACE Award for its NOx sensor for gas and diesel powertrains in the Product-Europe category. Today, there are approximately 1.5 million units in the field, and it is projected that by 2013 more than 7 million units will be in use. (From a press release on April 13, 2010)

R&D

R&D Expenditure by Divisions

(in million euros)
  FY2010 FY2009 FY2008
Chassis & Safety 422.3 380.8 423.6
Powertrain 396.9 328.8 420.1
Interior 407.9 434.7 432.5
Passenger and Light Truck Tires 120.8 113.5 119.5
Commercial Vehicle Tires 41.8 40.5 43.4
ContiTech 60.7 58.0 59.1
Total 1450.4 1,356.3 1,498.2

Product Development

Radar Sensor
-The Company introduced a commercial vehicle radar sensor. Working in combination with an emergency brake assist, the sensor detects stationary obstacles on the road, warning the driver early enough to prevent rear-end collision. If the driver fails to respond promptly, the system actuates the brakes itself to hinder the collision. (From a press release on November 5, 2010)
Monocular Camera System
-The Company has developed a monocular camera system capable of measuring the distance and will soon launch its commercial production. This unit designed to be applied to systems like rear-end warning employs the company's original control algorithm and has made it possible to measure the distance between a vehicle and an obstacle lying ahead, which has been considered difficult by a monocular camera. Its cost has been held to less than half of that of a binocular camera, lower than standard type digital cameras. Continental assumes this cost advantage will allow subcompacts or minivehicles to adopt the new system. By making the presentation of the low cost camera system, Continental is aiming to absorb needs of Japanese automakers eager to enhance safety equipment for their vehicles. (From an article in the Nikkan Jidosha Shimbun on November. 4, 2010)
Pressure Sensor
-The Company in partnership with Daimler, has developed a new pressure sensor to detect impact on the front bumper. An air hose is connected to two pressure sensors and flexibly built into the bumper. The system recognizes collisions with pedestrians and enables the rapid activation of safety systems. (From a press release on October 5, 2010)
Navigation System
-The Company has developed a new navigation system which guarantees fast traffic information updates via the internet, and helps users get to their destinations faster, safer and with lower fuel costs. The base data for this is provided by the traffic control center of the Hessian State Office for Road and Traffic Affairs. This data is transmitted online to PTV AG's information platform and is automatically analyzed there. Apart from providing details of the latest traffic situation, this platform also gives traffic forecasts and detour recommendations. With these help, Continental's navigation systems can optimize route guidance and at the same time help reduce existing traffic congestion and prevent new jams from developing on the detour roads. The developers can see this system being in regular use as soon as 2013. (From a press release on September 30, 2010)
Emergency Steer Assist (ESA) System
-The Company has developed the emergency steer assist (ESA) system, a new type of driver assistance technology. The ESA system is designed to help drivers quickly steer past obstacles in order to avoid an imminent hazardous situation. When in-vehicle radar sensors detect a hazardous obstacle in front, the system issues a warning and instantly calculates the optimum vehicle movement trajectory to prevent a collision. Any turn to avoid an obstacle should be carried out with a smooth steering movement to keep the vehicle stable. The ESA system is capable of preventing accidents when the vehicle is running on a dry road surface at a speed exceeding 70 kilometers per hour. Compared with an existing emergency braking technology, it can be successfully initiated in a higher speed range. The company aims to launch a new accident-prevention driver assistance system based on the ESA method within three years from now. (From an article in the Nikkan Jidosha Shimbun on September. 29, 2010)
Keyless Start & Entry System
-The Company has developed keyless start & entry system for all vehicle categories. The system makes it possible for the driver to open the car door without necessarily having to actually hold the key in hand. The vehicle recognizes when someone with the right key touches the door handle and then gives access to the vehicle. An ignition key is no longer needed, as long as the remote key is on board, the vehicle can take off, started with the push of a button. Continental is now extending this system, available in high-class vehicles to small cars as well as the micro-car category. (From a press release on September 27, 2010)
Anti-theft System
-The Company has developed "Novanto" intelligent anti-theft system. With the help of global positioning system (GPS) technology, Novanto always knows exactly where the vehicle at the moment. It transmits data wirelessly to a control center that is capable of immediately locating the vehicle on a monitor screen. If necessary, the center is capable of preventing ignition of the motor the next time the car thieves attempt to start the car. (From a press release on September 23, 2010)
Tire Pressure Monitoring System
-Continental Interior Division has developed "Filling Assistant" - a new application of tire pressure monitoring system that reports the tire pressure directly to the driver's smart phone. Technical requirements for the system are a tire pressure monitoring system with the corresponding sensors in the tires and vehicle electronics with a wireless interface. First series production of the Filling Assistant is expected from 2013 onwards. (From a press release on August 25, 2010)
Telematics System
-The Company has developed a new in-vehicle telematics system "AutoLinQ." Google's "Android" is used as the operating software for the first time in onboard devices. Various functions can be taken into the vehicle though the web. Also, such actions as engine start, door lock/unlock can be controlled remotely. Continental will present this technology to automakers in an attempt to realize its commercialization by 2012 or 2013. (From an article in the Nikkan Jidosha Shimbun on July. 16, 2010)
Engine Start-Stop (ESS) Control Unit
-The Interior Division of Continental has developed a new Engine Start-Stop (ESS) control unit on ultra-compact cars, especially targeting the emerging markets. All relevant functions are combined in a single control unit. The new control unit is going to enter series production in 2010 at its first Asian vehicle manufacturer. (From a press release on July 2, 2010)
Engine Management System
-The Company developed Engine Management System 3 (EMS 3), preparing the way for meeting the Euro 6 exhaust gas directive limits. EMS 3 provides vehicle manufactures for the first time with an engine management platform conforming to the AUTOSAR (AUTomotive Open System ARchitecture) standard. The system supports a range of power sources for vehicles and works with gasoline/diesel powered systems as well as with gas, hybrid and electric drives. (From a press release on April 29, 2010)

Technological Alliance

-Three German companies - ZF, Continental and ads-tec - are working gather to develop lithium-ion batteries for hybrid commercial vehicles. The collaboration is within the 'Future goes Electric (FUEL)' project sponsored by the German Federal Research Ministry of Education and Research. The objective of FUEL comes to an end in the summer of 2011. Continental takes the lead in the development and manufacturing of lithium-ion batteries and components. ZF is responsible for integrating the energy storage system into the overall hybrid system. ads-tec is responsible for automated production and testing technologies. (From a press release on May 10, 2010)

-The Company, and a German antenna manufacturer KATHREIN-Werke KG have developed an intelligent car antenna module. The module is designed to integrate multiple antennas as well as the corresponding transmission and reception electronics into one unit. It involves applications like telephone, GPS, remote keyless entry, tire pressure monitoring system, WLAN, radio, TV or car-to-car communication. The two companies are currently working with two customers to develop an antenna module for volume production. (From a press release on April 7, 2010)

Investment Activities

Capital Expenditure

(in million euros)
  FY2010 FY2009 FY2008
Chassis & Safety 247.1 159.5 336.0
Powertrain 301.5 247.2 494.4
Interior 191.3 131.3 265.2
Passenger and Light Truck Tires 404.3 198.3 292.7
Commercial Vehicle Tires 51.2 40.5 95.6
ContiTech 100.3 82.8 110.8
Other/Consolidation 0.7 -0.2 0.5
Total 1,294.4 859.4 1,595.2

Investment in Germany
-The Company announced that it will start volume production of electric motors, with peak outputs of 60 kW or 75 kW, at its Gifhorn plant, Germany in 2011 for a European carmaker. Continental has invested 12 million euros in the facility. The annual production capacity is designed initially for up to 60,000 electric motors. The launch of prototype production is planned for May 2010. (From a press release on April 30, 2010)

Investment Outside Germany
<China>
-The Company has set up a new production plant for the three Automotive Divisions - Chassis & Safety, Powertrain and Interior - in the Jiading Industrial Zone (JDIZ), Shanghai, China. In operation since September 2010, the products are supplied to OEMs in China, Japan, Korea and Europe. Continental will invest up to 160 million RMB in this new plant, which is situated on a land of 74,000 square meters. The total floor space of the plant for the first phase amounts to around 20,000 square meters. Currently, more than 800 employees are working at the new plant, and the number is expected to reach 1500 by 2015. In terms of production capacity, by 2015, the plant's numbers will ramp up to 7.5 million for hydraulic and electronic control units, 3 million units of printed circuit boards for clusters, 5 million units of door control modules and gateways, and 2 million units of thick film substrates. (From a press release on December 3, 2010)

-ContiTech Grand Ocean Fluid Co., Ltd. of China has opened a new plant for hose systems in Changchun. ContiTech invested roughly three million euros in the new plant, which is to turn out around 2.3 million A/C lines in 2011. The plant also produces over a million hose lines for power steering, fuel feed systems, exhaust gas management. Starting in 2011, lines for turbocharger lubrication, turbocharger cooling and transmission oil cooling will also be manufactured at the location. ContiTech Grand Ocean Fluid was founded in Changchun in 2002 as a joint venture between ContiTech and the Chinese companies Grand Ocean Industries and FAW-VW. Its main customers are Volkswagen, Daimler and BMW and domestic car makers. (From a press release on October 28, 2010)

-The Company has established a new joint venture named Continental Brake Systems (Shanghai) Co., Ltd. with Huayu Automotive Systems Components Company Limited (HASCO) in China. With 51% share owned by Continental, this new joint venture will work on development of brake system technology and solutions. The product portfolio contains front and rear axle caliper, rear axle combined parking brake caliper, drum brakes, front and rear axle brake hoses, electronic parking brakes and electronic vacuum pump solutions. Manufacturing facilities are Shanghai Automotive Brake Systems Co., Ltd and Continental Automotive Systems Changshu Co., Ltd. (From a press release on October 25, 2010)

-ContiTech has acquired all the shares in ContiTech-Jiebao Power Transmission Systems Ltd. - its former joint venture in Ninghai, Zhejiang Province, China. Previously, ContiTech held 60% of the Chinese entity and China's Ningbo Jiebao Group 40%. Around 700,000 automotive belts are produced each year in Ninghai. ContiTech intends to strengthen the manufacturing at the Ningbo location and to transfer Shanghai production activities to Ninghai by 2011. In future the company will be called ContiTech Power Transmission (Ninghai) Ltd. (From a press release on August 25, 2010)

-The construction work of Continental's passenger tire plant in Hefei, Anhui Province, China, is due to be completed in July 2010. The new plant is its first tire manufacturing facility in China. Over 185 million euros has been invested in the project. Initially, the Hefei plant aims to produce four million tires annually. The first locally produced Continental tires will be delivered to the Chinese market in early 2011. (From a press release on July 4, 2010)

-ContiTech inaugurated its development, production and sales facility in Changshu, Jiangsu Province, China, with an investment of almost 40 million euros. Initially, three business units - Air Spring Systems, Fluid Technology and Vibration Control - are commencing operations at this hub. The facility will produce mainly for the Chinese and other Asian markets. The target for ContiTech is to more than double the sales volume in China, boosting it from current 133 million euros to approximately 300 million euros by 2014. (From a press release on March 10, 2010)


<Tunisia>
-The Company plans to establish a new production facility in Menzel Jemil, Tunisia. At this site the auto parts manufacturer will produce car radios and GPS navigation systems for the European market. In its search for a new partner factory for its facility in Rambouillet, France, Continental has chosen Menzel Jemil. In this joint work between its French and Tunisian teams the Rambouillet will remain in charge of development and commercial activities while transferring production operations to Tunisia. (From a press release on May 3, 2010)