Annual Report 2016 Download the PDF version of the Annual Report 2016. PDF, 4.3 MB

226 Pages·2017·4.31 MB·English

Mobility Redefined
Annual Report 2016
Continental, with sales of €40.5 billion in 2016,
is one of the world’s leading automotive suppliers.
In our five divisions – Chassis & Safety, Interior,
Powertrain, Tires and ContiTech – we develop
intelligent technologies as well as products and
services for transporting people and their goods.
Over 220,000 employees are hard at work every
day at more than 400 locations in 56 countries.
2016 Highlights >
Key Figures >
Overview of the Corporation >
2016 Highlights
›
Sales up to €40.5 billion
›
Net indebtedness drops below €3 billion
›
Dividend set to increase by €0.50 to €4.25
Key Figures for the Continental Corporation
€ millions 2016 2015 in %
Sales 40,549.5 39,232.0 3.4
EBITDA 6,057.4 6,001.4 0.9
in % of sales 14.9 15.3
EBIT 4,095.8 4,115.6 –0.5
in % of sales 10.1 10.5
Net income attributable to the shareholders of the parent 2,802.5 2,727.4 2.8
Earnings per share in € 14.01 13.64 2.8
Adjusted sales1 40,261.7 39,232.0 2.6
Adjusted operating result (adjusted EBIT)2 4,341.2 4,369.0 –0.6
in % of adjusted sales 10.8 11.1
Free cash flow 1,771.3 1,443.6 22.7
Net indebtedness 2,797.8 3,541.9 –21.0
Gearing ratio in % 19.0 26.8
Total equity 14,734.8 13,213.9 11.5
Equity ratio in % 40.7 40.2
Number of employees as at December 313 220,137 207.899 5.9
Dividend per share in € 4.254 3.75 13.3
Share price at year end5 in € 183.70 224.55 –18.2
Share price at year high5 in € 220.10 234.25
Share price at year low5 in € 158.20 166.60
1 Before changes in the scope of consolidation.
2 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects.
3 Excluding trainees.
4 Subject to the approval of the Annual Shareholders’ Meeting on April 28, 2017.
5 Price quotations of the Continental share in the XETRA system of Deutsche Börse AG.
Overview of the Corporation
and Key Figures
Structure of the Continental Corporation
Continental Corporation
Sales: €40.5 billion; Employees: 220,137
Automotive Group Rubber Group
Sales: €24.5 billion; Employees: 124,753 Sales: €16.1 billion; Employees: 94,966
Chassis & Safety Powertrain Interior Tires ContiTech
Sales: €9.0 billion Sales: €7.3 billion Sales: €8.3 billion Sales: €10.7 billion Sales: €5.5 billion
Employees: 43,907 Employees: 37,502 Employees: 43,344 Employees: 52,057 Employees: 42,909
› Vehicle Dynamics › Engine Systems › Instrumentation & › Passenger and Light › Air Spring Systems
› Hydraulic Brake › Fuel & Exhaust Driver HMI Truck Tire Original › Benecke-Kaliko Group
Systems Management › Infotainment & Equipment › C ompounding
› Passive Safety & › Hybrid Electric Vehicle Connectivity › Passenger and Light Technology
Sensorics › Sensors & Actuators › Intelligent Transpor- Tmruenckt BTuirsei nReespsl,a EcMe-EA › C onveyor Belt Group
› AAdssviastnacnecde DSryisvteerms › Transmission › t Baotidoyn &S ySsetecumrsity › Passenger and Light › E lastomer Coatings
Truck Tire Replace- › I ndustrial Fluid
› Commercial Vehicles ment Business, The Solutions1
& Aftermarket Americas
› M obile Fluid Systems
› Passenger and Light
Truck Tire Replace- › P ower Transmission
ment Business, APAC Group
› Commercial Vehicle › V ibration Control
Tires
› Two-Wheel Tires
1 Renamed from Industrial Fluid Systems in January 2017.
Key figures for the core business areas
Automotive Group Rubber Group
€ millions 2016 2015 in % 2016 2015 in %
Sales 24,496.4 23,574.5 3.9 16,097.6 15,704.6 2.5
EBITDA 2,615.0 2,973.2 –12.0 3,559.6 3,181.5 11.9
in % of sales 10.7 12.6 22.1 20.3
EBIT 1,526.6 2,014.4 –24.2 2,688.6 2,255.8 19.2
in % of sales 6.2 8.5 16.7 14.4
Adjusted sales1 24,379.9 23,574.5 3.4 15,926.3 15,704.6 1.4
Adjusted operating result (adjusted EBIT)2 1,632.2 2,038.4 –19.9 2,828.4 2,485.2 13.8
in % of adjusted sales 6.7 8.6 17.8 15.8
1 Before changes in the scope of consolidation.
2 Before amortization of intangible assets from purchase price allocation (PPA), changes in the scope of consolidation, and special effects.
The automotive industry is
redefining mobility:
zero accidents, clean air
and full interconnectivity.
The required solutions are
new technologies, servitization
and mobility services in the
form of purely software-based
applications.
Find out more
in our digital magazine.
Available for free in app stores.
Continental AG > Annual Report 2016 > Contents
Contents
To Our Shareholders Management Report
C3 Key Figures for the Continental Corporation 34 Management Report
C4 Overview of the Corporation and Key Figures
4 Chairman’s Letter 35 Glossary of Financial Terms
6 Members of the Executive Board
37 Corporate Profile
8 Continental Shares and Bonds 37 Structure of the Corporation
40 Corporate Strategy
14 Corporate Governance 44 Divisions and Business Units
14 Report of the Supervisory Board 44 Chassis & Safety Division
18 Corporate Governance Report and 46 Powertrain Division
Declaration Pursuant to Section 289a of 48 Interior Division
the German Commercial Code (HGB) 50 Tire Division
22 Compliance 52 ContiTech Division
23 Remuneration Report 54 Corporate Management
57 Research and Development
60 Sustainability
61 Employees
65 Environment
68 Social Responsibility
70 Economic Report
70 General Conditions
70 Macroeconomic Development
71 Development of Key Customer Sectors
74 Development of Raw Materials Markets
76 Earnings, Financial and Net Assets Position
77 Earnings Position
83 Financial Position
85 Net Assets Position
89 Automotive Group
90 Development of the Chassis & Safety Division
92 Development of the Powertrain Division
94 Development of the Interior Division
97 Rubber Group
98 Development of the Tire Division
101 Development of the ContiTech Division
Continental AG > Annual Report 2016 > Contents
>
Consolidated Financial Statements
104 C ontinental AG 126 Statement of the Executive Board
Short Version in acc. with HGB 127 Independent Auditor’s Report
128 Consolidated Statement of Income
107 Other Information 129 Consolidated Statement of Comprehensive Income
107 Dependent Company Report 130 Consolidated Statement of Financial Position
107 Takeover Disclosures and Notes 132 Consolidated Statement of Cash Flows
107 Report Pursuant to Section 289 (4) 133 Consolidated Statement of Changes in Equity
and Section 315 (4) HGB
108 Remuneration of the Executive Board 134 Notes to the Consolidated Financial Statements
109 Corporate Governance Declaration Pursuant 134 Segment Reporting
to Section 289a HGB 140 General Information and Accounting Principles
148 New Accounting Pronouncements
110 Report on Risks and Opportunities 155 Companies Consolidated and Information
110 Risk and Opportunity Management on Subsidiaries and Investments
and Internal Control System 156 Acquisition and Disposal of Companies and
112 Material Risks Business Operations
112 Financial Risks 158 Notes to the Consolidated Statement of Income
113 Risks Related to the Markets in which 163 Notes to the Consolidated Statement
Continental Operates of Financial Position
114 Risks Related to Continental’s Business 203 Other Disclosures
Operations
116 Legal and Environmental Risks
118 Material Opportunities
Further Information
119 Statement on Overall Risk
and Opportunities Situation
120 Report on Expected Developments 212 Responsibility Statement by the Company’s
120 Future General Conditions Legal Representatives
120 Forecast of Macroeconomic Development 213 Members of the Executive Board and
121 Forecast for Key Customer Sectors their Directorships
122 Outlook for the Continental Corporation 214 Members of the Supervisory Board and
their Directorships
216 Ten-Year Review – Corporation
218 Financial Calendar
219 Publication Details
4 Continental AG Annual Report 2016 To Our Shareholders Chairman’s Letter
Chairman’s Letter
Mobility and our industries are currently changing faster than ever before, which means there has rarely been a
more exciting and promising time for Continental to shape the future of these areas. By investing in us, you are
investing in our pioneering technologies. I would like to thank you for doing so on behalf of our global team, as
well as on behalf of millions of people.
After all, with your investment, you are fostering our solutions and helping to protect millions of road users around
the world from accidents and their consequences. Moreover, you are also contributing to cleaner air, while paving
the way for intelligent, convenient, and connected driving. Backed by your support, we are designing mobility to
be sustainable, thus creating immense value.
In 2016, our pioneering technologies enabled us to continue our streak of successful business years. Our net
income was just above the previous year’s level, even though several isolated events impacted our earnings. We
are working hard to ensure that this does not happen again. We will be continuing our profitable growth in 2017.
Today, you can find our technologies in three out of four vehicles, where they play a crucial role. Take, for example,
advanced driver assistance systems with their sensory technology and software. These systems are our fastest-
growing product area. In just a few years, we have increased their sales from zero to approximately €1.2 billion,
and we expect that figure to exceed €2 billion in 2020. And that’s not all.
In addition, we provide solutions for connected mobility. In the future, vehicles will communicate not only more
directly with their drivers, but also more intensively with each other and with the infrastructure. They will warn one
another of dangers and tell each other about alternative routes. We are providing hardware and software for this
digital exchange of data and information. In doing so, your Continental is becoming one of the leading technology
and service companies.
Think about it. All in all, drivers spend as much as an entire year of their life in traffic jams, which is an unbelievable
waste of time, not to mention a needless waste of fuel. Traffic jams harm the environment and are quite simply an
annoyance for everyone. Our goal is therefore to keep traffic flowing. To this end, we are making vehicles intelligent
and capable of learning.
We currently generate a total of nearly €15 billion with digital technologies. This equates to 60 percent of the
sales in our three Automotive divisions.
Another example is zero-emission mobility. The future lies in electric drive systems, and we are very well-prepared
for this. We are working on orders from all of the world’s major markets. At present, demand for hybrid drive sys-
tems in particular is on the rise. Such systems consist of a diesel or gasoline engine, as well as a small electric
motor with a battery. This technology serves as a transitional bridge until all-electric vehicles have caught on in
the medium term. Our 48-volt “people’s hybrid” offers the best value for the money, while cutting carbon-dioxide
emissions by as much as 20 percent.
Your Continental is right at the forefront when it comes to electric mobility. In past years, we invested more than
a billion euros in this future-oriented field, and the trend is rising. We are currently working on customer orders
worth more than €2 billion. The transition from the combustion engine to electric mobility will not gather momen-
tum significantly until between 2025 and 2030. At some point during this phase, the number of combustion engines
will reach its highest level and then decline moderately. Our strategy and planning are therefore paying off, because
if you invest too early, you end up throwing away billions. But if you invest too late, you will lose out on the market.
We expect that some 110 million cars and light commercial vehicles will be produced in 2025. One out of ten of
those vehicles will feature all-electric drive systems, and nearly one in three will be equipped with a 48-volt or high-
voltage hybrid drive system.
Continental AG Annual Report 2016 To Our Shareholders Chairman’s Letter 5
Profitable growth outside of the automotive industry is another important part of our strategy. The share of sales
to industrial customers and end users is to be increased gradually toward a figure of 40 percent, with most of the
increase coming from our tire replacement business and from the ContiTech division. In 2016, the Tire division
had its most successful fiscal year to date. At the same time, it kicked off the third phase of its long-term growth
strategy, making investments in the billions. Our ContiTech division has continued to pursue its growth strategy
with acquisitions. In this way, we will strengthen our activities in the growth market of air springs and air spring
systems for railway engineering, while also boosting our surface-materials business.
Our company is well on track for continued success in the future. In our business fields, we are growing quickly
and profitably and are striving to achieve sales of over €50 billion in 2020.
Your trust is what drives us! We are looking forward to the next stage of our shared success.
Dr. Elmar Degenhart
Chairman of the Executive Board
6 Continental AG > Annual Report 2016 > To Our Shareholders > Member of the Executive Board
Member of the Executive Board
Dr. Ralf Cramer Helmut Matschi Wolfgang Schäfer
born in 1966 in Ludwigshafen, Germany; born in 1963 in Viechtach, Germany; born in 1959 in Hagen, Germany;
Continental China; Interior Division; Finance, Controlling, Compliance, Law, and IT;
appointed until August 2017 appointed until August 2022 appointed until December 2019
José A. Avila Dr. Elmar Degenhart Nikolai Setzer
born in 1955 in Bogotá, Colombia; born in 1959 in Dossenheim, Germany; born in 1971 in Groß-Gerau, Germany;
Powertrain Division; Chairman of the Executive Board, Tire Division,
appointed until December 2019 Corporate Communications, Corporate Purchasing;
Corporate Quality and Environment, appointed until August 2022
Dr. Ariane Reinhart Continental Business System,
born in 1969 in Hamburg, Germany; Automotive Central Functions;
Human Relations, appointed until August 2019
Director of Labor Relations,
Sustainability;
appointed until September 2022