Continental AG Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in million euros)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 Rate of
change(%)
Factors
Overall
Sales 32,736.2 30,504.9 7.3 1)
EBITDA 4,854.6 4,228.0 14.8
Chassis & Safety
Sales 7,052.5 6,510.8 8.3 2)
EBITDA 973.7 982.3 (0.9)
Powertrain
Sales 6,134.8 5,842.0 5.0 3)
EBITDA 590.2 484.7 21.8
Interior
Sales 6,434.2 6,110.7 5.3 4)
EBITDA 840.6 758.8 10.8
Tires
Sales 9,665.0 8,717.7 10.9 5)
EBITDA 1,974.0 1,526.5 29.3
ContiTech
Sales 3,711.8 3,583.1 3.6 -
EBITDA 547.7 515.0 6.3

Factors
1) Overall
-Consolidated sales rose by 7.3% in 2012. This increase was attributable to our Automotive divisions, which are strongly concentrated on the high-growth segments of the automotive supplier industry, and of increased sales growth outside Europe. The increase in the production of cars, station wagons and light commercial vehicles in 2012 had a positive influence on business performance. Exchange rate effects also contributed to the sales growth.

2) Chassis & Safety
-Sales volumes in the EBS business unit rose by 7.0% year-on-year to 19.6 million units.

-In the Hydraulic Brake Systems business units, sales of brake boosters increased by 4.1% year-on-year to 19.5 million units. Sales of brake calipers surged by 5.5% as against the year before to 44.3 million units.

-In its Passive Safety & Advanced Driver Assistance Systems business unit, sales of air bag control units were up 5.3% as against the previous year to 15.1 million units. Sales of driver assistance systems soared by 56.5% year-on-year to 2.7 million units.

3) Powertrain
-In spite of the difficult market environment in Europe, sales volumes in the Division grew by 5.0% in 2012. The Transmission, Sensors & Actuators and Fuel Supply business units made a particular contribution to this increase. The Hybrid Electric Vehicle business unit also increased its sales slightly as against previous year. As a supplier for vehicles with diesel engines and smaller gasoline engines, the Engine Systems business unit was particularly heavily impacted by the negative general economic development on the European sales market.

4) Interior
-Sales volumes in the Division were up 5.3% in 2012. Particularly, high increase were achieved for central body control units, access control and starting systems, door control units and tire pressure monitoring systems. The Infortainment & Connectivity business unit increased sales volumes, primarily due to the growing demand on the U.S. market. Sales in the Commercial Vehicles & Aftermarket business were, however, below the previous year's level. This was mainly attributable to weaker OE business for commercial vehicles in Brazil, Asia and Western Europe.

5) Tires
-Sales in the Division rose by 10.9% as against previous year. Passenger and light truck tire replacement business in the Asia Pacific region posted double-digit percentage gains in sales volumes.

Contracts

-In October 2012, the Company delivered three sizes of "ContiPremiumContact2" tires to Volkswagen as originally equipped tires for its "up!" compact car. The PremiumContact series tires have been adopted by a great many European automakers since they made their debut in the market. A unique 3D tread groove technology improves block rigidity and breaking performance on both wet and dry road surfaces. Flat-tire profiling and silicon compounds also make for improving wear resistance and prolonging tire life. (From an article in the Nikkan Jidosha Shimbun on Oct. 6, 2012)

-In July 2012, the Company announced that its new turbocharger is featured on the 1.0-liter EcoBoost gasoline engine from Ford. The engine has been available in the Ford Focus since April 2012. From the fall onward, it will also be available in the new Ford "B-MAX" MPV. This year will also see its introduction in the Ford "C-MAX" / "Grand C-MAX" range. The new turbochargers are manufactured by Schaeffler, Continental's partner in this venture, at its site in Lahr, Germany, which has capacity for up to two million units a year. (From a press release on July 26, 2012)

-In July 2012, the Company was commissioned by Fiat Group Automobiles to develop a new infotainment system. The system will be launched as a radio in its basic form but also as a multimedia system (head unit). The first Fiat model equipped with the Continental infotainment system will be the new Fiat "500 L", which is being produced in Serbia. The Continental infotainment system will then be rolled out across further models from Fiat/Chrysler. The head unit will start series production in July 2012. With this new system, which began development in December 2010, the driver has access to analogue and digital radio or navigation functions on a 5 inch touch screen. The new head unit uses the Microsoft operating system Windows Embedded Automotive and features text-to-speech as well as voice recognition, allowing drivers to utilize functions of the infotainment-system without taking their hands off the steering wheel. The new infotainment system was developed at Continental locations in Wetzlar (Germany), Regensburg (Germany), Deer Park (Illinois, the U.S.), as well as Guadalajara (Mexico) and Singapore. For Fiat/Chrysler the production will start in July 2012 in Brandys (Czech Republic), and will at a later date also take place at the Continental plant in Nogales, Mexico. (From a press release on July 5, 2012)

-In March 2012, the Company announced that it is providing the second generation head-up display for the new BMW "3 Series". The head-up display shows relevant information such as speed, navigation and infotainment data, as well as warnings in the driver's direct field of vision. The head-up display's virtual screen appears around two meters in front of the driver above the engine hood, so he is informed of all important issues without looking away from the road. The new head-up display has a volume of 3.8 liters and a weight of 1.5 kilograms. Compared with the previous version, the company was able to almost halve the volume and weight. Continental began producing head-up displays in 2003. In 2010, Continental began series production of the second-generation head-up display for the Audi "A6" and "A7". Both systems are produced in Babenhausen, in the German state of Hesse. (From a press release on March 22, 2012)

-In February 2012, the Company announced that it will supply its new Conti.eContact tires for electric vehicles and hybrid cars for the Renault "Twizy". The Conti.eContact was developed by the development department in Hanover, Germany and is produced in the passenger tire plant in Korbach, Germany. (From a press release on February 14, 2012)

Acquisitions

-In August 2012, ContiTech announced the acquisition of the automotive air conditioning business of the Collierville, Tennessee, U.S.-based Mobile Climate Systems division of Parker Hannifin Corporation. This acquisition includes plants in Mexico (Monterrey and Montemorelos), the Czech Republic (Chomutov), South Korea (Chonan) and China (Wuxi, Jiangsu Province). ContiTech will take on approximately 1,000 employees in total from this acquisition. Parker's automotive air conditioning business manufactures components such as hose and tube assemblies, accumulators, receiver dryers and oil coolant assemblies for the light vehicle automotive industry. The business is part of the Climate and Industrial Controls segment with annual sales of approximately 140 million USD. The mobile and hose portions of the Mobile Climate Systems Division are not part of the transaction. The acquired business will be integrated into ContiTech's Fluid Technology Business Unit. After the acquisition, ContiTech will become a supplier for manufacturers such as Ford, GM and Honda. (From a press release on August 13, 2012)

-In May 2012, the Company announced that it has acquired the outstanding 30% of the shares of Continental Sime Tyre Sdn. Bhd. from its Joint Venture partner Sime Darby Allied Products Berhad based in Malaysia. Continental Sime Tyre has now become a fully owned subsidiary of Continental and will be renamed as Continental Tyre Malaysia Sdn. Bhd. In Malaysia, Continental currently operates two tyre manufacturing facilities. One is located in Petaling Jaya where Truck and Bus Radial as well as OTR tyres for agricultural and industrial use are produced. The other facility is located in Alor Star where the company manufactures several brands of Passenger and Light Truck Radial tyres as well as motorcycle tyres. The company also operates a Technology Centre in Petaling Jaya. With its manufacturing plant in Prai, Penang, Continental has a complete range of R&D facilities and produces also electronic and electro-mechanical automotive products such as modular fuel supply units, body control modules, electronic control units for different automotive applications, and engine management systems. In addition, Continental is supplying instrument clusters for almost all car models of Malaysian car manufacturers Perodua and Proton. (From a press release on May 14, 2012)

-In March 2012, the Company announced that it has acquired Rico Auto Industries Limited's 50 percent shares in the Indian joint venture Continental Rico Hydraulic Brakes India Ltd. With this transaction the company will be a fully owned subsidiary of Continental. Since 2009 the plant in Gurgaon has been producing and supplying components for hydraulic brake systems to OEM customers in India. These include products consisting of calipers for front and rear axles, drum brakes, master cylinders, brake boosters and load sensing proportioning valves for passenger cars. In India, Continental expanded the India Technical Centre in 2011, and is planning expansion of its automotive facilities in Pune and Manesar in 2012. (From a press release on March 9, 2012)

Joint Ventures

-In July 2012, the Company and Korea-based SK Innovation announced that they signed an agreement founding a jointly managed company, which will develop and supply lithium-ion battery systems for cars. The operational phase has thus been initiated just six months after the letter of intent. SK Innovation will hold a 51% stake in the new company, Continental 49%. The venture, which will be managed operationally from Berlin, Germany, is slated to start business in the fourth quarter of 2012. Its research and development activities will be carried out in Daejeon, South Korea, in addition to Berlin. Production, marketing and sales will be set up locally in the target markets worldwide. Initially, there will be about 200 employees worldwide. (From a press release on July 23, 2012)

Restructuring

-In June 2012, the Company announced that its Chassis & Safety division has combined its activities in the field of inertial sensors and sensor clusters with the airbag control unit activities into a new business unit, Passive Safety & Sensorics (PSS), which is headquartered in Frankfurt am Main, Germany. Due to the strong trend toward integrating ESC functionality into airbag control units, the Inertial Sensors segment has been consolidated with the Occupant Safety segment in Regensburg, Germany, which will also serve as the headquarters of this segment. The new Business Unit Passive Safety & Sensorics reinforces the Chassis & Safety division's systems approach and can provide integrated solutions for more safety in order to meet individual customers' requirements on a global scale. The Advanced Sensors & Satellites segment, for example, offers sensors used in steering, chassis and brake systems, plus sensors that monitor batteries. It also offers acceleration and pressure satellites that provide all-around protection in case of an accident. The Speed Sensors segment's product portfolio includes wheel speed sensors for ABS and ESC as well as engine and transmission sensors for determining position, speed and turning direction. (From a press release on June 20, 2012)

Recent Development Outside Germany

-In December 2012, the Company announced the opening of its second plant Jingyue Branch, a new addition to Continental Automotive (Changchun) Co., Ltd. in Jilin in China. With the investment of 300 million RMB, approximately 37 million euros, the new plant will be fully operational in early January 2013. With a total land space of 109,200 square meters, the facility includes a production area, ware house, office building, laboratory and R&D center. The primary goal of the new plant is to optimize and increase production for Continental’s Chassis & Safety and Interior divisions. The existing plant will be dedicated to Powertrain division's engine systems and sensors and actuators products, while the Chassis & Safety and Interior divisions' production lines from plant no. 1 will be transferred to the new plant on behalf of the four Business Units Passive Safety & Sensorics, Chassis Components, Body & Security and Commercial Vehicles & Aftermarket. The annual production volume of this new plant is approximately 12.5 million units from Chassis & Safety division and 19 million units from Interior division. (From a press release on December 6, 2012)

-In December 2012, the Company announced that ContiTech has opened a new plant for rubber compounds in Nyiregyhaza, Hungary. Around 25 new jobs have been created at this production site. The plant belongs to Phoenix Legrugro Technologia Ltd., which has been affiliated to ContiTech Air Spring Systems and already operates a plant for air spring systems in Nyiregyhaza with 220 employees. The new compounding center supplies the ContiTech plants for air suspension systems in Nyiregyhaza, the hose production sites in Mako/Hungary and Carei/Romania, as well as external customers in the region. External customers who are already existing customers of Phoenix Compounding Technology in Germany are also to be supplied from the new compounding center. The production hall – initially equipped with one compounding line – was built in a six-month construction period. Space is available for expansion. ContiTech has invested around 5 million euros in the new plant. The company has a total of around 2,800 employees in Hungary working at its sites in Szeged, Mako and Vac. (From a press release on December 5, 2012)

-In December 2012, the Company announced that it will start producing the SPEED S variant of its Safety Platform for Efficient and Economical Design (SPEED) in China from 2014. At the same time, Continental will begin supplying a Chinese vehicle manufacturer with a SPEED S control unit, developed and produced locally in Changchun, Jilin Province. Also integrated into this Safety Control Unit (SCU) will be the vehicle dynamics sensors which supply data to the Electronic Stability Control (ESC) system. With SPEED, the company has developed a control unit that is based on a modular structure and can be adjusted easily to the wishes of car manufacturers. (From a press release on December 3, 2012)

-In September 2012, the Company launched three new production lines in Changchun, Jilin Province, China: NOx Sensors, High Temperature Sensors and Canister Purge Solenoid 6 (CPS6) of Sensors & Actuators Business Unit. Continental has produced over six million NOx sensors so far, and the annual local production capacity is over 500k units. The CPS6 production line in Changchun is the first installation globally with a maximum capacity of over 1 million pieces per year. In Continental, China is the only country besides Germany where NOx sensors are produced. In addition, the company recently produced the 30 millionth Knock Sensor in China. The production of Knock Sensors in China started 10 years ago and it is now delivered to 38 local customers as well as 19 overseas customers, including Japan, Indonesia, Australia, Thailand, Iran, Austria, Hungary and the U.S. The production capacity is close to 12 million units per year. (From a press release on September 26, 2012)

-In September 2012, the Company announced it is reviving up ESC (Electronic Stability Control) production capacity in Japan. Production of a new innovative ESC, which is expected to become Continental's mainstay product, will be doubled to around 80,000 a month starting this month, and its production capacity will, thereafter, be boosted even further up to close to 4 million a year in five years, by revamping production lines that have been used for previous products. Continental Automotive is eager to increase supply of ESC devices to Japanese automakers' plants, not only in Japan, but also overseas. The new "MK 100" ESC unit is 40 percent smaller, and 20 percent lighter than conventional products. When applications are added, it can be used for a wider variety of functions, such as automatic parking, emergency braking and regenerative braking. High versatility and economies of scale by expanding applications also contribute to cost reduction. Continental, which used to manufacture the new product only in Germany, commenced its Japan production in April this year at the plant in Hamamatsu owned by its Japanese subsidiary, now that its adoption was decided by Honda for its "N BOX" series and by Mazda for its "CX-5" SUV. (From an article in the Nikkan Jidosha Shimbun on Sep. 3, 2012)

-In June 2012, the Company announced that 100 million brake boosters have rolled off the assembly line in Jicin, the Czech Republic, since 1995. The Hydraulic Brake Systems Business Unit of the Chassis & Safety Division turns out around ten million boosters yearly at the plant. (From a press release on June 11, 2012)

Business Overview

-In January 2012, the Company announced that from January through early December 2011, more than ten million transmission control units came off the lines at the company's plants in Europe, Asia and North America. Since developing its first automatic transmission control units in 1982, the company has built more than 42 million of these units at its production plants around the world. (From a press release on January 17, 2012)

Business Plan

-In December 2012, the Company is going to boost production of tire pressure monitoring systems (TPMSs) to approximately 40 million units by 2014, which is double the amount (approximately 20 million units) it produced in 2012. The tire safety technology, which is obligatory in the U.S., is also becoming mandatory in the European Union and Korea effective November 2012 and January 2013, respectively. The company is poised to step up sales activities targeted at automakers by leveraging its latest technology, the electronic-Tire Information System (eTIS), as it aims to increase its presence in the growing TPMS market. (From an article in the Nikkan Jidosha Shimbun on Dec. 17, 2012)

-In October 2012, the Company announced it is focusing on standardizing products as well as their manufacturing processes targeted at global strategic vehicles Japanese automakers are aggressively at work to develop. With the aim of securing supply of the engine management system and products like sensors on a global scale, the Company will modularize products and establish standardized production lines so that it can start up parts production speedily at locations close to customers. The Continental Automotive Group will construct a quick supply system of low priced components that can be flexibly modified according to local requirements. (From an article in the Nikkan Jidosha Shimbun on Oct. 23, 2012)

-In September 2012, the Company announced plans to introduce its ContiPressureCheck tire pressure monitoring system for commercial vehicles in Europe. The system is designed to act as an early warning system, identifying slow leaks and maintain correct tire pressure when on the road. ContiPressureCheck measures the pressure and temperature of each individual truck tire every few seconds and delivering the results to the cab information display. ContiPressureCheck comprises a single module with integrated sensors, data processor and communication system, housed in a rubber container that is glued to the inner surface of the tire tread. It can be retrofitted to any tire brand. ContiPressureCheck will be available from spring 2013 on European markets, starting with Germany, Poland, Benelux and Turkey. (From a press release on September 18, 2012)

-In August 2012, the Company announced it is set to expand the turbocharger application to gasoline engines. Its turbocharger was installed for the first time in the EcoBoost engine on the new Ford Focus for the European market at the end of last year. Continental has supplied its turbochargers to 1.0- and 2.0-engines on the "Fiesta" and "B-MAX", as well. The Ford "Explorer", which has been introduced to the Japan market, also uses Continental's turbo in its engine. A forthcoming new model installed with a 2.5-liter engine will be a third model to adopt the turbo, which is the last in the current model lineup for Continental's turbochargers. The Company manufactures turbocharger units at the European production facility of its capital partner Schaeffler. When demand for a turbo grows worldwide, Continental will step up marketing activities to serve production facilities of Japanese automakers in Japan and overseas, by leveraging advantages in product cost and the global network of Continental. (From an article in the Nikkan Jidosha Shimbun on August 30, 2012)

-In January 2012, the Company announced that it will begin series production of an internet-capable multimedia head unit for a European automotive manufacturer in October 2014. The multimedia head unit is based on the Linux operating system and complies with the GENIVI standard. Drivers can operate the multimedia head unit via touch-sensitive interfaces, handwriting recognition and voice control. The head unit also controls in-car functions such as the air conditioning and sliding roof. Drivers and passengers can also connect external devices to the head unit via Bluetooth, USB or WLAN to make use of the car's Internet connection or simply to play music stored on their devices. (From a press release on January 9, 2012)

R&D

R&D Expenditure by Divisions

 (in million euros)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Chassis & Safety 511.7 463.1 422.3
Powertrain 535.9 454.9 396.9
Interior 448.0 449.6 407.9
Tires 195.1 176.1 162.6
ContiTech 75.5 65.0 60.7
Total 1,766.2 1,608.7 1450.4

R&D Facilities

-In November 2012, the Company announced that it has inaugurated its new R&D Centre in Timisoara, Romania. The 30,000 square meter building accommodates over 2,000 employees and represents a 20 million euros investment from the company's side. The plant and the R&D area are now combined in the same location. The three research & development centers in Timisoara, Sibiu and Iasi and the three plants located in Timisoara, Sibiu and Brasov, represent an investment of approximately 235 million euros in Romania by the end of 2011, and created more than 5,200 jobs. (From a press release on November 19, 2012)

-In November 2012, the Company announced that its Powertrain Division inaugurated a new Test and Development Center for transmission control units at the headquarters of the Transmission Business Unit in Nuremberg, Germany. The company has invested approximately 7.5 million euros in the building and test facilities, which will employ 200 staff. The nine laboratories, with a floor area of 2,500 square meters, include a hydraulic test bed and a prototyping center. In all, the Nuremberg plant provides work for almost 2,100 employees, over 400 of them recruited in the past four years alone. The 28 dedicated production lines will turn out more than two million transmission controllers this year, among a total output of some 3.6 million items of equipment. (From a press release on November 19, 2012)

-In August 2012, the Company announced that it opened its new tech center in the Salto Industrial Park, Brazil. With the new tech center, Continental's Powertrain division will expand its capacity to offer vehicle manufacturers in Brazil the full spectrum of tests and application developments for gasoline and diesel engines. Around 28 million BRL (more than 11 million euros) has been spent on the new tech center, which covers a total area of 2,400 square meters and is staffed by 50 people. The Company currently has 13 sites in Brazil, covering all five of its divisions and employing more than 6,000 people. Since 2007 the international automotive supplier invested more than 400 million euros in Brazil. (From a press release on August 23, 2012)

-In August 2012, the Company announced that it is planning to open a new research and development site for advanced driver assistance systems early 2013 in Ulm, Germany. In the short term, around 100 new engineering jobs will be created in the new site. the Company has other German sites for driver assistance systems in Lindau, Ingolstadt and Ottobrunn. It was in April 2012 that the business was combined into its own Business Unit, located in Lindau, Germany. (From a press release on August 17, 2012)

-In July 2012, the Company announced that it has opened its new Research & Development Center in Singapore with a total investment of about 36 million Singapore dollars (21 million euros). The new facility is a seven-storey office building with a total floor space of approximately 10,170 square meters. It currently houses about 650 employees from the Interior division of the Continental Automotive Group, as well as colleagues from the ContiTech and the Tire division. The capacity of the building can be expanded with the addition of an eighth floor, to accommodate a total of 1,000 employees. Continental currently has twelve R&D centers in Asia. (From a press release on July 27, 2012)

-In June 2012, the Company announced that it has put a new tire testing facility into operation at the Research and Development Center in Hanover Stocken, Germany, which enables quicker and more efficient scanning of passenger and commercial vehicle tires. With its new CT scanning facility Continental can simulate driving situations such as braking, accelerating and entering curves so exactly that they can observe the internal components of a tire under the conditions which affect them most. The Company can test around 850 passenger and commercial vehicle tires annually. The facility weighs a total of approximately 14 tons, and required the investment sum of 1.4 million euros. (From a press release on June 27, 2012)

-In June 2012, the Company announced that it hold a groundbreaking ceremony for its new Technology Center in Limbach-Oberfrohna, Germany, which is due to open for business in December 2012. The Company is investing 1.7 million euros in the construction of the new Technology Center which will ultimately provide work for around 100 employees. The two-story building will offer a good 1,200 square meters of floor space. At this facility, Continental will pursue the development of the production machinery required for manufacturing piezo injectors. In the year 2000, the first piezo injectors came off the line at Continental's Limbach-Oberfrohna plant, with production at the Stollberg plant commencing in 2004. Earlier this year, the Limbach-Oberfrohna site celebrated production of the 50 millionth piezo injector. And the next generations of injector systems are already on their way, with volume production to be phased in from 2013 onwards. At its Limbach-Oberfrohna/Stollberg site, Continental Automotive Group employs around 1,600 people, who last year alone turned out 10 million piezo injectors. The Company will start volume production for its latest piezo innovation, a diesel injector with direct drive, in 2014. (From a press release on June 13, 2012)

-In February 2012, the Company announced that it opened its winter test center under the Chassis & Safety Division in Heihe, Heilongjiang Province, China. With a 7,000,000-square-meter lake and 30,000 square-meter land area, the Heihe winter test center is the 4th such testing facility for ABS and ESC globally with the other three having already been established in the U.S, Europe and Japan. Focus is on testing vehicle stability in all driving situations, especially on low friction surfaces. In China, the Chassis & Safety Division concentrates its vehicle application development, system testing and engineering activities in its two R&D locations in Changchun, Jilin Province and in the Jiading, Shanghai. (From a press release on February 23, 2012)

R&D Activities

-In December 2012, the Company announced that it received Nevada's 'Autonomous Vehicle Testing License' – a state approval from the Nevada Department of Motor Vehicles (DMV) to test automated driving on the state's public roads. Continental's testing license represents the first license granted by the Nevada DMV to an automotive supplier. Utilizing four short-range radar sensors (two at the front, two at the rear), one long-range radar and a stereo camera, the Continental's automated vehicle is capable of cruising down an open freeway as well as negotiating heavy rush-hour traffic. The vehicle, which has logged more than 15,000 miles (24,000 kilometers), is built primarily with equipment that is already available in series production. The Company intends to develop and launch series production of solutions for partially automated systems for its customers by 2016. It will develop the first applications for highly and ultimately fully automated driving ready for production by 2020 or 2025. (From a press release on December 20, 2012)

-In August 2012, the Company announced that the simTD (Safe and Intelligent Mobility –Test Field Germany) research project, which consists of 17 partners including Continental, started car-to-x communication field tests in Germany. As part of simTD, the Company has developed the Communication Control Unit (CCU) which enables information to be shared over different channels such as UMTS or automotive WLAN. Positioning and time synchronization data can also be accessed via GPS. Together, the Communication Control Unit and a Vehicle Application Unit, which was developed by project partner Bosch within the simTD project, form the ITS (Intelligent Transportation Systems) vehicle station that is installed in all simTD test vehicles. These applications enable traffic information to be displayed to the driver, such as warnings about the end of a traffic jam hidden round a bend, the position and length of a section of roadworks and the traffic situation in that section. (From a press release on August 6, 2012)

-In July 2012, the Company unveiled a prototype of EV (Electric Vehicle). The Company integrated around 40 of its EV components in the vehicle, including the motor, battery, power electronics, novel displays and controls, all the peripheral devices for propulsion and charging, and Conti.eContact tires. Most of these components are ready to go into production or are already being mass produced. The prototype has already logged over ten thousand kilometers, a testament to the work of the Company's Systems & Technology Automotive department and in-house Engineering Services which built the prototype in a little over six months. (From a press release on July 4, 2012)

Product Development

Energy Storage System
-In October 2012, the Company announced it is now making its Power Net Technology energy storage system available for light trucks, bringing the benefits of start-stop technology to urban delivery vans as well. At the heart of the design is a double-layer capacitor, also known as a supercap. These energy storage devices offer much faster charging and discharging rates than a conventional battery. Even at very low temperatures, an almost unlimited number of cold starts are possible without overtaxing the electrical system battery. At the same time, all electrically operated on-board equipment, such as air-conditioning or navigation systems, will remain fully functional, even when a large amount of power is required to restart the engine. In developing the technology, Continental was able to draw on the applications engineering expertise acquired working on Peugeot's eHDI models. (From a press release on October 22, 2012)

Sensor Module
-In October 2012, the Company developed a new SRL-CAM400 sensor module that integrates a CMOS camera and an infrared LIDAR (LIght Detection And Ranging Sensor) into a single compact unit, which can be installed in the mirror base even in small cars. Within a speed range of up 72 km/h, the SRL-CAM400 can help drivers avoid a collision by initiating automatic emergency braking. The difference in speed between the vehicle and an object can be up to 40 km/h. If the speed differences are greater, emergency braking will at least considerably reduce the force of the impact. Other advanced driver assistance systems, such as Lane Departure Warning (LDW) and Lane Keeping System (LKS), Traffic Sign Recognition (TSR) and Intelligent Headlamp Control (IHC) can be installed as additional optional vehicle equipment with the same sensor module. The new sensor module is currently at the pilot production stage, with series production planned to start in 2015. (From a press release on October 17, 2012)

Cockpit for Commercial Vehicles
-In September 2012, the Company and SAS Automotive Systems, a joint venture of Continental and Faurecia S.A. specializing in the development, assembly and logistics of customized cockpits, have developed the T.Dash concept cockpit for commercial vehicles. Its T structure makes it extremely flexible and modular. For example, the center console and glove compartment area can be simply repositioned. In addition, the new instrumentation solutions are built in: The study includes a 12" digital instrument cluster that displays the relevant driving and vehicle information in clearly arranged 2D and 3D graphics. (From a press release on September 18, 2012)

Intelligent Camera System
-In September 2012, the Company announced that it developed a new TopView intelligent camera system for commercial vehicles, which makes the blind spot visible and enables 360-degree monitoring of the vehicle and its surroundings. The heart of Continental TopView consists of four microcameras mounted on the outside of the vehicle, which thanks to fisheye lenses and high resolution sweep the complete sides, rear and front of buses and trucks. An electronic control unit merges these four digital, high-resolution camera images on a display. In addition, at the push of a button Continental TopView switches between 2D and 3D representation. The system will be shown at the 2012 International Motor Show (IAA) Commercial Vehicles, as an installed system in the Continental Innovation Truck and the MAN Metropolis, a heavy refuse collection vehicle. The Continental developers are already working on new applications specific to commercial vehicles. For instance, in a further stage the use of as many as seven cameras should enable Continental TopView to be implemented for tractor/semitrailer combinations or articulated buses. (From a press release on September 18, 2012)

Fuel Quality Sensor
-In September 2012, the Company announced it is developing a new fuel quality sensor for heavy-duty trucks. The new Continental Fuel Quality Sensor can determine the changing diesel/biodiesel blend in the tank. In addition, it measures the amount of problematic substances such as sulphur, water, or gasoline in the diesel fuel. By delivering this information, the fuel quality sensor can help to detect contaminants early before they can cause such failures as sulphur poisoning of the aftertreatment system. After concluding the four year Euripides research project, which ended in 2011, Continental has now provided product samples of its new Fuel Quality Sensor to several truck OEMs for testing and vehicle integration. (From a press release on September 5, 2012)

Software
-In July 2012, the Company announced that with its Global Software Radio technology, the company is replacing a large part of the hardware in conventional car radios with intelligent software. For example, it can play several radio stations simultaneously. Using loudspeakers and additional headset outlets, car drivers and rear seat passengers can listen to their favorite stations independently of each other. The Global Software Radio also allows the driver to listen to a station while a different channel is being recorded. It can also look for the most up-to-date traffic information in the background and provide this to the driver. Regardless of whether a radio receives HD radio in the U.S. or DAB in Germany, the different standards can be met by simply changing the software. Continental has already entered series production with various automotive manufacturers using parts of the Software Radio technology. (From a press release on July 16, 2012)

Digital Tachograph
-In July 2012, the Company announced that VDO developed a new digital tachogragh DTCO 2.0, which implements the "1-minute rule" like the previous DTCO 1.4. The electronics are so programmed that the longest activity within a given minute determines whether the minute will be classified as driving time or resting time. Especially in short-range distribution work, in traffic jams, or standing in line waiting for customs clearance, when the vehicle often is moved only for a few seconds and otherwise stands still for a long time, the drivers can save driving time thanks to this rule. The new DTCO provides improved remote download of tachograph data. Moreover, with this new generation VDO complies with the latest security requirements of the European Union and makes the DTCO even more resistant to tampering. (From a press release on July 11, 2012)

Thin Electronic Car Key
-In June 2012, the Company announced that it has launched a thin electronic car key on the market. While most modern card-shaped car keys are usually more than five millimeter thick, the new car keys from Continental are just 3.4 mm thin. The new key card offers electronics with comfort functions enabling motorists to open, close and start the vehicle without even needing to handle the card. The new key has already gone into series production on the new Kia "K9" luxury sedan for the Korean market. (From a press release on June 29, 2012)

Power Electronics
-In April 2012, the Company developed a new generation of power electronics for electric drive train applications. In figures, the integrated module has a continuous power of 20 kilowatts at a weight of eight kilograms and just five liters of space. Mass and volume are about 33 percent less than in the previous generation. This was possible due to the integration of two modules: The inverter and the DC-DC converter are now assembled in a single housing. The module is used in the Audi "Q5 Hybrid Quattro" and also in purely electric vehicles. (From a press release on April 26, 2012)

Rear Cross Traffic Alert System
-In March 2012, the Company has developed the new Rear Cross Traffic Alert (RCTA) system which detects vehicles in the driver's blind spot. Like Blind Spot Detection (BSD) systems, the RCTA is based on two short-range radar sensors. These two eyes, which are not visible behind the plastic bumper at the right and left rear corners of the vehicle, can each monitor a 120 degree angle. The RTCA is designed to detect cars, motorcycles and bicycles that are within at least 35 meters and traveling at a speed of somewhere between 5 km/h and up to around 30 km/h. Initial series production of the new RTCA advanced driver assistance system is planned for 2013. (From a press release on March 29, 2012)

Tires for Electric and Hybrid Vehicles
-In March 2012, the Company announced the Conti.eContact environmentally friendly tire for electric and hybrid vehicles. The new tire technology with extremely low rolling resistance significantly increases the travel range of electric-powered vehicles. The tire has already been chosen as the sole OE tire for the Renault "Twizy" electric vehicles. Continental's engineers achieved a 30 percent reduction in rolling resistance by designing a tire that is very large and narrow in appearance. The larger tire diameter contributes to mitigating deformation of the tire when entering the contact patch, thus lowing rolling resistance. The new tire has the same level of load bearing capacity as conventional tires. The Conti.eContact will be produced at Continental's passenger tire plant in Korbach, Germany. (From an article in the Nikkan Jidosha Shimbun on March 6, 2012)

Haptic Feedback Technology
-In January 2012, the Company unveiled its development, which is the integration of haptic feedback into touch-sensitive surfaces. For example, slight counter-pressure from the display on the driver's finger indicates that an operating step has been performed successfully, making it unnecessary for the driver to look at the screen again. Feedback can be provided in forms ranging from slight counter-pressure to vibration, depending on the respective control concept.  Continental has completed the basic pre-development phase and is now in a position to work on specific implementation for new vehicle models together with automotive manufacturers. (From a press release on January 9, 2012)

Investment Activities

Capital Expenditure

(in million euros)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Chassis & Safety 383.8 327.1 247.1
Powertrain 395.0 393.7 301.5
Interior 257.1 247.7 191.3
Tires 830.2 637.1 455.5
ContiTech 151.0 110.6 100.3
Other/Consolidation 2.3 (4.9) 0.7
Total 2,019.4 1,711.3 1,296.4

Capital Expenditure

-In October 2012, the Company announced that in the first three quarters of 2012, it invested 1.3 billion euros, approximately 240 million euros more than in the same period of the previous year. In the first nine months of this year, it invested 641 million euros in the Tire and ContiTech divisions. The company also indicated that the investment volume for the year as a whole would amount to approximately 2 billion euros. (From a press release on October 31, 2012)

-In August 2012, the Company announced that it spent almost 830 million euros on investments in the first half of 2012, which is 210 million euros more than in the same period of 2011. The capital expenditure ratio rose accordingly from 4.2% to 5.0%. In the Rubber Group, it was as much as 6.7%, with the additional expenditures for capacity expansion in the Tire Division. (From a press release on August 2, 2012)

-In March 2012, the Company announced that it will invest approximately 300-500 million euros annually in the expansion of its existing plants around the world. In 2011, the Tire division sold approximately 122 million passenger and light truck tires and approximately 7 million commercial vehicle tires worldwide. (From a press release on March 9, 2012)

Investment Outside Germany

-In October 2012, the Company announced it will increase its investment in emerging nations. Of the planned amount of its global investment of 2 billion euros for this year, the company is going to allocate more than half to emerging countries. In addition, its tire division will invest 1 billion euros in China, India, Brazil and Mexico in the next four years to boost its production capacity. The plan was announced by the company's Chairman Dr. Elmar Degenhart at a press conference held in Tokyo on October 17. Further, Continental expects its sales between January and December 2012 to be around 32.5 billion euros, up 6.6% year-on-year. (From an article in the Nikkan Jidosha Shimbun on Oct. 18, 2012)

<China>
-In December 2012, the Company announced the opening of its second plant Jingyue Branch, a new addition to Continental Automotive (Changchun) Co., Ltd. in Jilin in China. With the investment of 300 million RMB, approximately 37 million euros, the new plant is fully operational in early January 2013. With a total land space of 109,200 square meters, the facility includes a production area, ware house, office building, laboratory and R&D center. The primary goal of the new plant is to optimize and increase production for Continental’s Chassis & Safety and Interior divisions. The annual production volume of this new plant is approximately 12.5 million units from Chassis & Safety division and 19 million units from Interior division. (From a press release on December 6, 2012)

-In September 2012, the Company launched three new production lines in Changchun, Jilin Province, China: NOx Sensors, High Temperature Sensors and Canister Purge Solenoid 6 (CPS6) of Sensors & Actuators Business Unit. The CPS6 production line in Changchun is the first installation globally with a maximum capacity of over 1 million pieces per year. (From a press release on September 26, 2012)

<Hungary>
-In December 2012, the Company announced that ContiTech has opened a new plant for rubber compounds in Nyiregyhaza, Hungary. Around 25 new jobs have been created at this production site. The plant belongs to Phoenix Legrugro Technologia Ltd., which has been affiliated to ContiTech Air Spring Systems and already operates a plant for air spring systems in Nyiregyhaza with 220 employees. The new compounding center supplies the ContiTech plants for air suspension systems in Nyiregyhaza, the hose production sites in Mako/Hungary and Carei/Romania, as well as external customers in the region. External customers who are already existing customers of Phoenix Compounding Technology in Germany are also to be supplied from the new compounding center. The production hall – initially equipped with one compounding line – was built in a six-month construction period. Space is available for expansion. ContiTech has invested around 5 million euros in the new plant. (From a press release on December 5, 2012)


<Russia>
-In December 2012, the Company announced that ContiTech AG is investing some 13 million euros in a new plant for air-conditioning and power steering lines in the Russian city of Kaluga. Construction of the plant is expected to begin in February next year; the first series parts are scheduled for production in December 2013. The manufacturing facility will be constructed on the 60-hectare site where a Continental tire plant is currently being set up. The Fluid production hall measures 4,800 square meters, and an administration building will also be constructed. The workforce in the new Fluid plant is expected to increase to 160 by 2015. The plant will initially supply air-conditioning and power steering lines for Renault/Dacia and power steering lines for AvtoVaz (Lada). (From a press release on December 10, 2012)