Continental (CON) Spin-off summary

Strategic rationale and decision process

• Executive board decided to pursue a 100% spinoff of the Automotive group, creating two fully independent, listed companies by end of 2025.

• The move is driven by rapid market changes, increased need for agility, and the belief that standalone entities will unlock greater value and growth potential.

• The spinoff aims to give the automotive team full entrepreneurial freedom to adapt to industry dynamics and leverage its technological expertise.

• The decision reflects a shift from previous strategies, with recent market disruptions and internal progress prompting the change.

• Both companies will be equipped with strong balance sheets and positioned for capital market readiness.

Transaction structure and timeline

• The spinoff will be a 100% separation, with no retained shares, targeting a Frankfurt Stock Exchange listing by end of 2025.

• Shareholders will receive shares in the new automotive entity proportional to their current holdings, with no investment required and no proceeds to Continental.

• One-time costs are expected in the low- to mid-triple-digit EUR million range, with tax effects in the low triple digits.

• Key milestones include detailed analysis and structure finalization by Q4 2024, AGM approval in April 2025, and listing by year-end.

• Preparations for the spinoff began August 5, 2024, with all necessary steps being initiated.

Automotive business outlook and transformation

• Automotive generated €20.3 billion in 2023 sales, employs about 100,000 people, and is focusing on software-defined vehicles and autonomous driving.

• The business is focusing on operational excellence, cost reduction, and streamlining, including headcount reductions and R&D efficiency, with a €400mn savings target for 2025.

• Strategic priorities include becoming a market leader in software-defined vehicles and expanding with Asian OEMs.

• The carve-out of the user experience (UX) business is paused to prioritize the spinoff timeline.

• Automotive targets remain at 6%-8% adjusted EBIT margin, with positive cash flow based on current market assumptions.